Cargill continued to stress sustainability in fiscal-year 2016.
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Revenues totaled $107.2 billion, an 11 percent decline that reflected lower commodity prices, a strong USA dollar and divestitures.
Cargill recorded a rise in net earnings for the fiscal year ended May 31, but adjusted operating earnings and revenues both fell. The variance between net earnings and adjusted operating earnings included gains on sales of businesses and other assets, asset impairment charges, and a LIFO inventory adjustment. The company cited “strong” turkey and value-added protein in North America and poultry globally, except in China. Trading activities had more mixed results stemming from low volatility in the agricultural commodity markets for much of the year combined with stalling growth in some emerging economies.
Full-year earnings in Origination & Processing decreased significantly from a year ago. While rising grain supplies have provided cheaper raw materials for processing, they have muted some market swings that create trading opportunities for grain merchants like Cargill and rivals Archer Daniels Midland Co.ADM -0.16 % and Bunge Ltd.BG -0.41 % . The segment’s fourth quarter was not profitable as trading and timing effects in oilseed processing affected results negatively. But, a new oilseed crush, refining and port facility was finished in northeastern China and a joint venture for a grain export terminal in the Ukraine was established. The company sold its crop insurance agency in the USA, and exited from crop inputs in Central and Eastern Europe. Even so, the segment had strong performance in South America and China. Adjusted operating earnings rose significantly in the fourth quarter due in part to improvement in North America. But, full year results were below prior year numbers. Full-year results edged below the prior year due to hard market conditions globally in beef through the first three quarters, with some improvement in North America in the fourth quarter.
In the company’s animal nutrition and protein segment, full-year results finished below the prior year because of hard market conditions globally in beef through the first three quarters. Cargill also acquired salmon nutrition company EWOS and about $500m in acquisitions and investments aimed at expanding the North American protein business. That’s still an improvement from last year’s $51 million fourth quarter loss.
The operating loss of $19m was in contrast to the $230m profit in the period prior, said the company. He declined to comment on a report last week by the Wall Street Journal that Cargill is mulling the sale of its energy and metals units. “We made important changes, adding capabilities essential to our customers’ success“.
In the past year, Cargill has spent $3 billion on acquisitions and expansions of existing facilities and divested almost $2.4 billion in assets, the company said.
Along with the strategic work at the company, there have been efforts made to alter some company practices, said MacLennan. It saved more than $200 million by increasing efficiency in its plants and supply chains, and by scaling up global shared services.
Cargill Inc.is continuing to review its sprawling array of businesses as the largest closely held USA company tries to recover profitability lost amid a slump in agricultural prices and some commodity-trading missteps.
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Cargill Inc. reported a $19 million loss for its most recent quarter, pressured by struggles in its core grain business.
