The company attributed the earnings decline to a $161 million charge related to federal tax reform legislation. Large global supplies of grains that are causing an “…extended period of sluggish agricultural commodity markets…” also challenged the company and its competitors.
Net earnings for the nine-month period were $2.39 billion compared with $2.49 billion reported in 2017. Excluding the tax charge, Cargill said, the third quarter was in line with last year.
“Our steady results from operations demonstrate that our strategic direction is the right one,” said David MacLennan, chairman and CEO. “The performance of our team worldwide keeps Cargill moving ahead, preparing us to continue to grow.”
Adjusted operating earnings for the third quarter were $559 million compared with $715 million reported in the year-ago period. Nine-month adjusted operating earnings declined 7 percent to $2.4 billion, down from $2.58 billion reported a year ago.
Revenues for the third quarter climbed 2 percent to $27.85 billion, raising the year-to-date figure to $84.32 billion.
Cargill reported a solid increase in adjusted operating earnings in the company’s Animal Nutrition & Protein segment. “Performance in complete animal feeds, premixes, additives and micro-nutrients contributed strongly to earnings, as did beef and egg protein results in North America,” the company explained. “The segment's aqua nutrition and poultry businesses trailed the year-ago quarter due to a mix of factors, including lower pricing in some markets.”
Joint ventures in beef and poultry helped Cargill increase its presence in targeted animal nutrition and protein markets. In the beef segment, for instance, Cargill is expanding its Columbia, South Carolina, ground beef plant, which the company acquired in 2016.
“The fresh poultry joint venture between Cargill and the United Kingdom’s Faccenda Foods was completed in January and now operates as Avara Foods,” the company said. “C-Joy, a joint venture between Cargill and Asian foodservice company Jollibee Foods, opened its new poultry processing facility in Batangas province, south of Manila. It provides dressed and marinated chicken to Jollibee Foods’ stores and restaurants in the Philippines.”
Earnings in the company’s Food Ingredients & Applications business decreased on mixed performance. Cargill’s Food Ingredients & Applications segment is the second-largest contributor to company earnings.
The company’s Origination & Processing segment earnings edged ahead of the year-ago third quarter, Cargill reported. “After five years of very large crops, the buildup in global stocks has quieted markets, but volatility picked up late in the period, allowing for better trading opportunities,” the company noted.
Finally, results in the Industrial & Financial Services segment decreased slightly on lower returns from Cargill’s fund investments compared to the third quarter of 2017. “Operationally, the segment’s metals and ocean transportation businesses surpassed last year's third quarter, buoyed by strong analytics and changing market dynamics that enhanced trading performance,” Cargill noted. “Trade and structured finance moved ahead on a diversified performance.”