Cargill reported record earnings in the first quarter of fiscal 2013. However, net income at company tumbled 41 percent in the first quarter of fiscal 2014. Still, net income of $571 million represented a solid start to the fiscal year, and first-quarter revenues were strong at $33.8 billion.
"Fiscal 2013 and the first quarter of fiscal 2014 have shown stabilization in earnings back to more normalized levels, which in combination with lower commodity related debt provide support that Cargill can maintain gross leverage in the 2.5x or lower range during most periods," Fitch analysts noted.
Additionally, Cargill's total debt declined approximately 13 percent from the end of fiscal 2012 to $13.2 billion at Aug. 31. Also, annual free cash flow has been strong since fiscal 2012 and is $4.4 billion for the latest 12 months, according to Fitch.
Fitch analysts said Cargill's large operations and extensive geographic and product diversification helped lessen earnings volatility.
"Cargill's ratings reflect its competitive position as the largest agricultural company based in the US and as one of the biggest privately owned companies in the world," according to Fitch analysts. "Its operations span every major country and almost every agricultural commodity. Key agricultural operations include oilseeds processing, corn milling, meat processing, and animal nutrition."