Cargill Quarterly Net Profits Jump on Strong Grain Trading, High Beef Demand
Cargill posted a significant increase in quarterly net profits for its first quarter ending August 31. Strong grain trading, healthy processing margins, and increasing beef demand have driven the company’s net income up by 66 percent to $852 million for the quarter this year from $512 million for the same quarter a year before.
Additionally, the company saw its operating profits climb to $827 million from $611 million last year while revenue declined slightly from $27.5 billion to $27.1 billion.
Earnings increased for the company’s animal nutrition and protein businesses due to higher demand for beef and a growing U.S. cattle herd combined with low cattle costs. Meanwhile, the company’s originating and processing business that buys, handles, processes and stores corn and soybeans, also saw a noticeable increase in earnings, while its starches, sweeteners and edible oils divisions saw improved earnings.
These results are somewhat unexpected as global agribusinesses have been issuing warnings due to weak commodity prices and bumper crops creating challenges within the industry. But Cargill has been taking measures internally, and restructuring its business as part of a long-term strategy designed to strengthen the company and increase margins.