Cargill’s 20% Jump in Earnings Led by Grain and Oilseeds

In the company’s first quarter of fiscal year 2016, Cargill saw a 20% jump in earnings to $512 million, led by a solid global performance by its grains and oilseeds processing and animal nutrition divisions.

Adjusted operating earnings fell off slightly from $619 million to $611 million, while revenues fell 17% from $33.3 billion to $27.5 billion.

There were a lot of moving parts to be managed in the quarter – volatility in emerging markets, unstable currency fluctuations, the weather, and the integration of both ADM’s newly acquired chocolate business and the salmon nutrition company, EWOS, into the company’s operations.

The company’s Origination and Processing unit was responsible for the largest contribution to its first quarter results, posting adjusted operating earnings that were up marginally over a year ago. However results for the grain and oilseed supply chain business increased significantly as a result of the company being able to position itself well in commodity markets that have been seeing downward trends. The company’s results from its soybean crush activities was also positive, benefitting from enhanced capacity utilization in South America and a particularly extensive processing season in North America.

In other businesses, the starches and sweeteners segment was under pressure in Europe and North America due to low sugar prices and low crude oil prices affecting ethanol markets. Staple foods saw a drop in earnings in some emerging markets, but salt results were up after Cargill acquired a new salt facility in Michigan.

The Animal Nutrition and Protein division saw lower adjusted operating earnings in the quarter, as better results in animal nutrition due to higher sales volumes were offset by a poorer showing for animal protein.

Beef saw a weaker quarter as cattle costs remain high and high retail prices are driving consumers to opt for alternative meat purchases.