MINNEAPOLIS – Cargill reported $100 million in earnings from continuing operations in the second quarter of fiscal 2012 ended Nov. 30, 2011, an 88 percent drop from $832 million in the same year-ago period.
In the first six months, earnings from continuing operations were $336 million, compared with $1.53 billion in the first half of 2011. Both the year-ago figures exclude earnings from Cargill’s former majority investment in The Mosaic Company.
Cargill's global group of meat businesses performed well below the record earnings pace of 2011, the company reported. Reductions in US fed cattle supplies pressured margins in beef and other meat units also faced higher raw material costs. The food ingredients and applications segment made the largest contribution to second-quarter earnings, the company said.
“The second quarter was significantly below expectations, especially in contrast to last year when we posted our strongest quarter ever,” said Greg Page, chairman and chief executive officer. “Our food ingredients and agriculture services businesses generated solid earnings. At the same time, our commodity-based trading and asset management businesses faced significant challenges.
"First, commodity and financial markets were driven more by political uncertainties than by underlying supply and demand fundamentals. Second, our performance in the sugar market was poor. Additionally, our meat businesses on a combined basis experienced one of their weakest quarters. Finally, we recognized a significant number of one-time items, including asset impairments, and acquisition and integration expenses,” he added.
The company reported solid earnings in the agriculture services segment, but lower compared to 2011 when market opportunities for grain handling and export, and for global feed ingredient merchandising, were more favorable. Costs related to the Provimi animal nutrition acquisition were recorded in the agriculture services segment. Cargill completed the acquisition of Provimi for an enterprise value of $2 billion.
Consolidated revenues for the second quarter were $33.3 billion, up 17 percent from $28.5 billion in the same year-ago period. First-half revenues totaled $67.9 billion, compared to $54.2 billion in 2011.
Page said he is optimistic about the company’s earnings prospects for the remainder of the fiscal year.
“Cargill has been through difficult cycles before, made changes and emerged stronger for it," he said. "We are confident that the actions we are taking to create a more agile enterprise will better position us in the current economic environment.”