Cargill reports 88% drop in second quarter 2012 earnings
Political uncertainties, poor performance in sugar market, weak meat business contribute to low numbers
Cargill has reported $100 million in earnings from continuing operations in the fiscal 2012 second quarter ended November 30, 2011, an 88% decrease from $832 million in the same period in fiscal 2011.
In the first six months, earnings from continuing operations were $336 million, compared with $1.53 billion in fiscal 2011's first half. Both the year-ago figures exclude earnings from Cargill’s former majority investment in The Mosaic Company. “The second quarter was significantly below expectations, especially in contrast to last year when we posted our strongest quarter ever,” said Greg Page, Cargill chairman and CEO. “Our food ingredients and agriculture services businesses generated solid earnings. At the same time, our commodity-based trading and asset management businesses faced significant challenges. First, commodity and financial markets were driven more by political uncertainties than by underlying supply and demand fundamentals. Second, our performance in the sugar market was poor. Additionally, our meat businesses on a combined basis experienced one of their weakest quarters. Finally, we recognized a significant number of one-time items, including asset impairments, and acquisition and integration expenses.”
Cargill is actively working to reduce its costs and simplify its work processes, and Page said he is optimistic about the company’s earnings prospects for the remainder of the fiscal year. “Cargill has been through difficult cycles before, made changes and emerged stronger for it," said Page. "We are confident that the actions we are taking to create a more agile enterprise will better position us in the current economic environment.”