Cargill reports significant rise in Q2 profit

American agribusiness company Cargill has reported a four-fold increase in its Q2 2013 net earnings to $409m, compared to $100m in the corresponding quarter of fiscal 2012, driven by stronger results in four of the company’s five business segments.

The company’s revenues in the quarter ended 30 November increased 6% to $35.2bn.

Cargill chairman and chief executive officer Greg Page said that the company posted solid second quarter results, with earnings balanced and diversified across the company.

"The steps we’ve taken over the past months to focus attention on what our customers value most, change how we work, instill more cost discipline and invest in growth are paying off in the current year," Page noted.

"Most importantly, these changes are key to delivering sustainable growth year in and year out," he added.

Segment-wise, the company’s origination and processing division was the largest contributor to its second-quarter results.

Improved margins in oilseed processing as well as strong results in global trading and risk management helped boost the company’s earnings during the quarter.

Cargill’s food ingredients and applications segment, which includes two groups of businesses – food ingredients and animal protein – witnessed a slight drop in earnings from the year-ago quarter.

Combined earnings in food ingredients decreased from last year’s strong results, mostly due to excess capacity in the North American ethanol market and the return of profits to more normalised levels in some product lines.

On the other hand, the animal protein businesses posted a combined profit compared to a loss in Q2 2012 when US beef industry’s processing margins were sharply negative.

A majority of Cargill’s meat businesses benefited from increased volumes or margins in the current quarter, although results were affected by high raw material or livestock feeding costs.

The agriculture services segment posted a rise in profits, partly attributed to improved operating results in animal nutrition.

Although the North American farm services businesses of the company benefited from large grain shipments in Canada, the impact of drought-reduced crops in the Midwest had a negative effect on the US results.

The risk management and financial segment reported profits in Q2 2013, while the segment’s energy business was flat with last year on a combined basis.

Cargill’s industrial segment, which supplies salt and steel products and services, reported a rise in earnings despite deicing salt production volume lagging behind typical levels because of the inventory carryover from a mild North American winter last year.

For the first six months, the company’s earnings totalled $1.38bn, up from $336m in the previous year.

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Image: Cargill reported improved results in the second quarter, with earnings balanced and diversified across the segments. Photo courtesy of Cargill, Incorporated.