Cargill earnings fall 82 percent, beef and oilseeds cited
Cargill Inc said on Thursday that quarterly earnings fell 82 percent, the giant U.S. agribusiness firm's worst quarter in more than 20 years, with profit margins weak in its oilseed and beef processing operations.
Full year profits were also disappointing as both sales and profits from the company's global food supply businesses were squeezed by soft economies and volatile commodity markets.
"Cargill's earnings performance was not up to our expectations, though with notable exceptions," Cargill Chief Executive Greg Page said in a statement. "We did not trade as well in this year's markets, which were driven as much by the economic and political environment as by the fundamentals."
Minneapolis-based Cargill, one of the world's largest privately held corporations, reported $73 million in earnings from continuing operations for the fiscal fourth quarter ended May 31, down from $404 million a year earlier.
It was Cargill's worst quarter since the second quarter of fiscal 1991 when Cargill earned $71 million, a company spokeswoman said.
Cargill's full-year fiscal 2012 earnings fell 56 percent to $1.17 billion from a record $2.69 billion in the prior year, and were well below expectations, the company said.
Fourth-quarter revenues were $34 billion, a 2 percent drop from a year ago. Cash flow from operations for the full fiscal year was $3.51 billion, compared with last year's $4.55 billion.
Cargill, a leading food processor, grain and meat exporter, and ethanol producer, is a top trader in dozens of commodity markets around the world. But it is subject to risks from weather-related supply problems, including the current ruinous drought in the United States.
Grain prices have soared to records this summer and those effects are likely to show up in fiscal first quarter earnings for June-August. Cargill did not cite any drought effects in its earnings analysis.
Page appeared on television last week to voice support for an easing of the U.S. government's mandate to produce rising amounts of ethanol, saying the squeeze on corn supplies has added unnecessary volatility to soaring corn prices and squeezed livestock producers - like Cargill, a major beef producer.
Among the five main businesses, Cargill said its food ingredients segment was the largest positive contributor to company results in both the fourth quarter and full year.
Ingredients posted record earnings for the full year, with performance particularly strong in sweeteners, starches, specialty oils and cocoa worldwide, and in staple foods in several emerging markets.