Crop prices drag on Cargill Q1 earnings
Oct. 7, 2014
by Meat&Poultry Staff
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MINNEAPOLIS – Cargill reported a 26 percent drop in net earnings for the first quarter of fiscal 2015. The company attributed the result to falling crop prices.
Cargill reported net earnings of $425 million in the fiscal 2015 first quarter ended Aug. 31, compared to $571 million in the year-ago period. Revenues in the first three months totaled $33.3 billion, a 2 percent drop from last year’s $33.8 billion.
“Although Cargill’s first quarter was not as strong as last year, we had several areas of good performance and are optimistic about the opportunities ahead,” said David MacLennan, president and CEO. “This year’s big crops, not just in North America but across agricultural production areas worldwide, will enhance food security after several years of weather disruptions. Our company is well positioned to connect these new supplies to growing demand.”
Segment results for Animal Nutrition & Protein saw a moderate increase in the first quarter, according to the company. Animal nutrition operations posted a fair performance on higher sales volumes but slightly lower earnings due to a gain on the sale of a milling business in last year’s first quarter, the company noted. Meanwhile, the company’s animal-protein businesses jointly delivered a strong performance.
“Beef processing in Australia benefited from ample cattle supplies and strong export demand,” Cargill said. “In North America, lower input costs bolstered cattle feeding results; on the processing side of the business, cattle costs were very high during most of the period, but consumer demand for beef stayed strong. The expected shortage of hogs caused by the porcine epidemic diarrhea virus [PEDv] was less detrimental to Cargill’s US pork operations than anticipated, allowing for a good first quarter. Cargill’s chicken and turkey operations in Central America, Europe, Thailand and the US also realized higher earnings on a combined basis.”
During the first quarter, Cargill closed its beef-harvest facility in Milwaukee, citing tight cattle supply brought about by producers retaining cattle for herd expansion. The ground-beef plant at the site remains open to meet customer needs, Cargill said.