Cargill Posts First Loss in 14 Years

After ADM and Bunge recently reported lower than expected profits, Cargill posted its first loss in 14 years - the result of the Venezuelan currency decline and a technological write off.

Cargill reported a loss of $51 million for the March through May period – the first lost for the group since the same time period in 2001 when it reported a loss of $87 million. Multiple factors played a role in the turn of fortunes; the group had to write off a portion of its SAP technology system, which ended up not meeting its requirements, and the negative effects of the crash of the Venezuelan bolivar was also noted, which fell almost 90% in value on the black market over the past year amid falling oil prices and exchange rate controls.

In addition, the group announced that the revisions to Venezuela’s currency has driven the company to revise down its earnings for the March to May period for 2014 from $424 million to $376 million.

David MacLennan, Cargill’s chief executive, noted that the company’s four divisions managed to stay out of the red in the last quarter, but only industrial and financial services managed to increased profits due to strategic oil market maneuvering. Although Cargill’s businesses generated earnings, problematic results from last year and slow growth in emerging markets affected performance.

The company also flagged the occupation of its sunflower seed processing plant in Ukraine by armed militia, crop hoarding and slow selling by farmers in Argentina and Brazil, ‘reduced price volatility’ and high cattle costs in North America as factors limiting trading profits and the company’s bottom line.