April 14, 2011
Third-quarter earnings for Cargill rise by 30%
Cargill announced on April 13 that its earnings amounted to US$763 million from ongoing operations in the fiscal 2011 third quarter which ended on February 28, 2011.
This represents an increase of 30% from US$588 million in the same period a year ago.
The company recorded US$342 million which can be attributed to its majority investment in The Mosaic Company whereby the income is now categorised as profits from discontinued operations after the two companies'' announcement on January 18, declared agreement and imminent closure of a split-off and neat distribution of Cargill''s 64% ownership stake in Mosaic. Profits from discontinued business in the year-ago period were US$310 million, of which US$141 million was from Mosaic. Cargill''s third-quarter net earnings reached a total of US$1.11 billion, an increase of 23% from US$898 million in the previous year.
In the first nine months, profits from ongoing operations were US$2.29 billion, a 47% growth from a year ago. The addition of US$1.19 billion in earnings from discontinued operations boosted Cargill''s nine-month net income to US$3.48 billion as compared to US$1.91 billion in the year-ago period.
Total revenues not including Mosaic rose 21% to US$30.5 billion in the third quarter, bringing the total for the first nine months to US$84.7 billion.
"Cargill posted solid earnings in a period of volatile commodity markets and geopolitical change," said Greg Page, Cargill chairman and chief executive officer. "All of us in agriculture are living with high levels of price volatility, in which small changes in the quantity of production are having dramatic impacts on price. Cargill''s ability to focus on the factors of supply and demand, while gauging external events that can uproot market fundamentals temporarily, is critical to the risk management services we provide to our customers and to our own financial performance."
Four of Cargill''s five business sections increased profits in the third quarter. Results were topped by the origination and processing section, which utilised its worldwide sourcing and risk management capabilities to cater to customers'' supply needs despite market disruptions.
The earnings of food ingredients and applications, a section that joins 40 food ingredient and meat businesses, increased moderately. Many business units relied on operational efficacy and price risk management to make up for higher input costs. Results in the risk management and financial section improved from a year ago, showing improved performance in stronger financial markets and in risk-sensitive energy markets. Industrial earnings also grew seasonally. Although earnings were slightly reduced, the farming services section benefited from farm customers'' demand for grain marketing and price risk management services.
Cargill and Mosaic jointly declared a transaction that would result in the neat distribution of Cargill''s 64% ownership position in Mosaic, the publicly held fertiliser company, to Cargill''s shareholders and debtors. The transaction is predicted to close in the second quarter of calendar 2011.