Cargill reported revenue of $27.3 billion for the first quarter of fiscal year 2018, slightly more than the $27.1 billion reported a year ago.
Adjusted operating earnings were $888 million, more than 7 percent higher than the same period a year ago. Net earnings on a U.S. GAAP basis were $973 million, up 14 percent from $852 million a year ago.
“We’re off to a good start in our new fiscal year, powered by the significant work we’ve done over the last few years and continuing to accelerate our performance,” said David MacLennan, Cargill’s chairman and CEO. “Even as market conditions vary across our sectors, our teams are delivering for our customers and achieving results to fuel future growth.”
Segment results
Animal Nutrition & Protein carried its momentum from fiscal 2017 into the new quarter, with adjusted operating earnings up significantly from last year. Protein results in North America were lifted by brisk consumer demand for beef, strong exports and more abundant cattle supplies, resulting in better utilization of processing capacity. Global poultry slightly lagged the year-ago period, as somewhat weaker results in Central America trimmed strong domestic sales and exports out of Southeast Asia. Global animal nutrition nearly reached last year’s quarterly results. Gains attributable to sales of value-added feed additives and premixes were offset by market pressures in aqua feeds in Europe and swine in Vietnam.
At the start of the quarter, Cargill acquired Pollos El Bucanero, a leading producer of chicken and processed meats in Colombia. Also in the protein space, Cargill invested in San Leandro, California-based Memphis Meats. The young company is developing methods to cultivate meat directly from animal cells. Over time, cultured proteins could potentially complement conventionally produced meats as part of the equation to sustainably nourish the future. In animal nutrition, Cargill completed the purchase of Southern States Cooperative’s feed business, which serves customers in the southeastern and eastern U.S. It also formed a partnership with Austria’s Delacon, a leading maker of phytogenic feed additives for the animal nutrition market. Cargill and Delacon seek to accelerate the growth of these natural, plant-based feed additives that support animal health.
Food Ingredients & Applications was the second-largest contributor to company earnings, as continued attention to raising commercial capabilities and operating efficiencies yielded improved earnings.
Origination & Processing was down from last year’s strong quarter, as positive trading results helped buffer against a challenging environment. Soybean processing in Brazil and China, and exports from Brazil also added to earnings. Although global demand for grain and oilseeds continues to grow, rising production and building global stocks during the last four crop cycles has depressed market volatility and commodity prices. The segment is working to increase productivity in its supply chain while continuing to leverage its trading and risk management capabilities to bring additional value to customers. The startup of efficient new production lines in the segment’s oilseed processing plants in Wichita, Kansas, and Fayetteville, North Carolina, furthered this objective.
