Cargill reported a 14% rise in its net earnings in its third quarter, as the agribusiness carried out a series of cost reductions.
For the three months to 28 February, the Minnesota-headquartered firm recorded net earnings on a US generally accepted accounting principles (GAAP) basis of $566 million.
Revenues were down 4% year-on-year to $26.9 billion, with the company affected by the outbreak of African swine fever in China as well as “unfavourable dairy economics in the US”.
Cargill’s animal nutrition and protein unit was the largest contributor to adjusted operating earnings, boosted by strong demand for beef as well as egg products. However, higher costs at the firm’s poultry processing joint ventures in the Philippines and the UK contributed to a decline in global poultry results.
Figures were mixed across the food ingredients and applications segment. Starches and sweeteners earnings declined on historically low ethanol prices in North America and higher energy and raw material costs in Europe. Lower sales volume and higher operating costs in North America trimmed otherwise strong cocoa and chocolate performance in other regions.
Earnings in the origination and processing division reflected a “challenging environment with ongoing trade tensions and other supply chain disruptions”, Cargill said. The trade turbulence negatively affected soybean crush operations in China, as did lower demand for soybean meal for feed following the culling of hogs to control the spread of African swine fever.
Cargill CEO Dave MacLennan said: “Disruptions and uncertainty in the global business environment continued to present challenges during the quarter, but our teams captured greater efficiencies across the company.
“We remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so they can win with consumers in local markets.”
During the quarter, Cargill announced a deal to acquire Smet, a Belgium-based supplier of chocolate and chocolate decorations. Cargill said the purchase aligns with its intent to accelerate growth in speciality ingredients. It is expected the transaction will close in the first half of calendar 2019.
Last month, the company launched a South America Sustainable Soy Policy and an updated Forest Policy, furthering commitments to move towards a sustainable supply chain.
© FoodBev Media Ltd 2019