Cargill first quarter revenues even with last year’s
Animal Nutrition & Protein segment earnings up sharply from prior year
Cargill has reported financial results for the fiscal 2017 first quarter ended Aug. 31, 2016. Three key facts you need to know are:
- Revenues were $27.1 billion, essentially even with last year’s $27.5 billion.
- Net earnings on a U.S. GAAP basis were $852 million, up 66 percent from $512 million a year ago. The variance between adjusted and net earnings was largely a function of timing differences related to inventory, derivatives and hedging.
- Adjusted operating earnings rose 35 percent to $827 million in the first quarter, compared with $611 million in the year-ago period.
“We posted a strong start to the new fiscal year,” said David MacLennan, Cargill’s chairman and CEO. “We’ve been charting a new path to higher performance, and it’s rewarding to see the many changes we’ve made resulting in gains across much of the company.”
The Animal Nutrition & Protein segment was the largest contributor to adjusted operating earnings in the first quarter, with results up sharply from the prior year. Profitability was led by the segment’s beef business, which benefited from the North American market’s ongoing transition to increased cattle supplies as well as renewed consumer demand for beef. The global group of poultry businesses, along with U.S.-based turkey and further processed eggs, delivered increased earnings over the prior year. Animal nutrition contributed to the strong results, as well, with sales growth in parts of Asia and in North America. Sales volume for aquafeeds was reduced by weather-related events in some countries. The segment’s new aqua nutrition unit offset part of the impact with its sales strength in high-value functional feeds and in raw material sourcing.
To grow its protein portfolio, Cargill purchased Five Star Custom Foods, which specializes in cooked protein products for the foodservice and food manufacturing sectors, with facilities in Fort Worth, Texas, and Nashville, Tennessee. Cargill is selling two cattle yards in the Texas Panhandle to Amarillo-based Friona Industries, which is already a significant supplier of fed cattle to Cargill. The sale will allow capital used today to buy and feed cattle to be redeployed in other parts of the business. With the upcoming introduction of the antibiotic-free Honest Turkey product line, the company is expanding its commitment to turkeys raised without the use of antibiotics, which will differentiate these products from conventional offerings.
Origination & Processing earnings rose moderately from last year’s first quarter, due in part to the realization of improved soybean processing margins in the current period along with the reversal of mark-to-market losses taken in the preceding quarter. Results also were boosted by North American grain exports, canola in Canada, biodiesel in North America and Europe, and corn trading and marketing in Brazil. As announced in August, Cargill is selling to Bunge its soybean and rapeseed crush, oil refining and related bulk storage assets in Amsterdam, and soybean crush facility in Brest, France. The transaction is subject to regulatory clearance from the European Union. Cargill is retaining its soybean processing plants in Barcelona, Spain, and Liverpool, U.K., as well as other oilseed processing and refining facilities in Europe.