Excluding Mosaic, Cargill profit climbs 14%

by Eric Schroeder
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MINNEAPOLIS — Net income at Cargill fell 22% in fiscal 2010 to $2.6 billion, pulled lower in part due to the company’s investment in The Mosaic Co., a producer and marketer of concentrated phosphate and potash.

Excluding Mosaic, Cargill’s full-year earnings during fiscal 2010 rose 14% to $2.07 billion. Net sales for the year were $107.9 billion, down 6% from $115.1 billion a year ago.

For the fourth quarter ended May 31, net income totaled $691 million, which compared with $327 million in the same period a year ago. Excluding earnings from Mosaic, Cargill’s fourth-quarter income rose 87% to $433 million. Net sales during the fourth quarter were $28.1 billion, up 11% from $25.4 billion in the year-ago period.

“We are pleased with the strength and breadth of Cargill’s performance,” said Greg Page, chairman and chief executive officer. “Fifty-six per cent of the company’s business units delivered increased earnings for the full year, including 20% at record levels. The diversity in our business allowed us to deal effectively with the uncertainty in the global economy. We utilized strengths and expertise across Cargill to create solutions for our customers.”

Mr. Page added that Cargill continues to invest significantly in the company’s future growth.

“Over the past year, we opened 17 new and expanded facilities of significant scale, including joint ventures,” he said. “Fifteen more major projects are under way. This represents a global, multiyear investment of more than $1.1 billion.”

Cargill said all five of its business segments posted increased earnings in the fourth quarter, and three of the five had higher earnings for the full year.

A sharp gain was registered in the company’s food ingredients and applications segment during the full year, with a moderate gain scored during the fourth quarter.

“A mix of factors, including lower raw material costs, good cost management, firmer demand and more value-added products and services, contributed variously to the overall improvement in the segment, which is made up of nearly 40 food ingredient and animal protein business units,” Cargill said.

Meanwhile, the agriculture services segment, which provides crop and livestock producers with farm services and products, rose in both the full-year and fourth-quarter periods. Cargill attributed the gains to the late, large North American harvest and improved costs and volumes in global animal nutrition products and services.

The risk management and financial segment, which was adversely affected by the global financial crisis in fiscal 2009, rebounded to post solid profits in the fourth quarter and full year.

Despite strong fourth-quarter results, Cargill’s origination and processing earnings finished below the year-ago level, reflecting the changeover in the current year to range-bound markets that offered fewer trading opportunities.

Industrial earnings rose sharply in the fourth quarter behind improved results from Cargill’s investment in Mosaic, but full-year results from the investment remained below the year-ago level.

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