Cargill has seen its profit shrink by 6% in its second-quarter results, as it cited rising cattle costs for the decrease.
For the three months to 30 November, the company posted profit of $948 million, down from $1.03 billion in the same period last year.
However, net sales rose by 8% to $29.2 billion, thanks in part to turkey sales in the US ahead of Thanksgiving.
The company’s Animal Nutrition and Protein unit was the largest contributor to adjusted operating earnings in the quarter, narrowly exceeding last year’s results. Animal nutrition earnings rose across the global business, with improvement led by premix and feed additives.
Cargill CEO David MacLennan said: “Even as conditions vary across our global markets, we continue to realise greater benefits from operating as an integrated company with a unique combination of talent, assets, insights and solutions.
He noted that during the quarter, the company announced more than $1 billion in agreed acquisitions, joint ventures and new investments in facilities. “Thanks to the results of our recent strong performance, we are reinvesting in ways that enable our teams to achieve more for our customers and lead for growth.”
Last month, the UK Competition and Markets Authority approved the joint venture between Cargill’s fresh chicken business in the country and meat producer Faccenda Foods. Once completed, the venture will serve the UK’s food retailers and foodservice companies with fresh chicken, turkey and duck.
With regards to organic growth, Cargill is investing $146 million in its cooked meats facility in Nashville, Tennessee. Acquired last year, the new outlay will double the plant’s pizza toppings capacity and fund the construction of a pepperoni production facility.
Earnings in the Food Ingredients and Applications unit were up, with a majority of the business posting “good gains for the quarter”. Cocoa and chocolate products, malts for brewers, distillers and food manufacturers, as well as sweeteners and starches for food and other applications led results in most regions.
The Origination and Processing business was down moderately from last year’s second quarter, as another year of very large US corn and soybean crops added to the buildup in global stocks. Cargill said that although global demand continues to grow, today’s abundant supplies have weighed on markets, diminishing volatility and trading opportunities.
Last month, Cargill announced it had partnered with Ecolab and Techstars to establish the Farm To Fork Accelerator programme, which aims to support innovation in the agriculture, food safety, food-related digital technology and food processing sectors.
Selected companies which join the initiative will receive investment from the partnership, and then participate in a three-month training and mentoring programme.
© FoodBev Media Ltd 2018