* Q3 earnings $766 million, vs $763 million last year
* Revenues $31.9 billion, up 5 percent
* Food segment leads results
By Christine Stebbins
April 10 U.S. agribusiness giant Cargill Inc
reported a rebound in earnings after its worst quarter
in a decade, led by record profits in its global food ingredient
businesses and stronger results in energy trading.
Minneapolis-based Cargill, one of the world's largest
privately held corporations, reported $766 million in earnings
from continuing operations for the fiscal third quarter ended
Feb. 29, just ahead of $763 million a year earlier.
Revenue rose 5 percent to $31.9 billion.
Third-quarter results represent a bounce back after
Cargill's second quarter profits fell 88 percent to $100 million
-- the worst quarterly performance since 2001, as earnings were
hurt by investments made in equity markets and by distressed
assets amid the European debt crisis.
"Cargill's earnings strengthened in the third quarter,
totaling more than twice that earned in the first six months of
the fiscal year," Cargill's chief executive Greg Page said in a
statement. "Although it continues to be an unsettled year for
the global economy, we did a better job navigating the
Despite the third-quarter rebound, profits were still below
year-ago levels in four of Cargill's five main business units.
But there were "much stronger" results in the company's energy
businesses, the company said, which kept its big risk-management
and financial unit slightly below the year-ago results.
Cargill and rivals such as Archer Daniels Midland Co
and Bunge were hit late last year by volatile prices,
with commodity markets often gyrating on news of the European
debt crisis rather than the fundamental factors like food supply
But it said the recent quarter saw a marked improvement.
"The grain and oilseed trading and processing businesses put
their combined insight to good advantage in analyzing and
managing the ongoing instability and risk in the global economic
and geopolitical environment," Cargill said in its release.
"The segment established favorable trading positions in most
parts of the business, even though the slowdown in U.S. grain
exports, the buildup in global oilseed processing capacity and
geopolitical tensions made for challenging market conditions."
In December the company announced it was cutting 2,000 of
its employees globally, or 1.5 percent of its workforce, citing
a weak global economy. Cargill told Reuters on Tuesday it was on
track to have layoffs completed by May 31.
Standard & Poor's analyst Chris Johnson said the results
showed some stabilization which he expected. Commenting on
Cargill's job cuts: "There really isn't enough time for there to
be a meaningfully impact showing yet on earnings."
RECORD FOR FOOD INGREDIENTS, BEEF IN CYCLICAL DOWNTURN
Third-quarter earnings got a big boost from Cargill's
massive food segment. Cargill's food ingredient businesses,
which include sweetners, starches, and soy and wheat flour,
posted record profits, the company said.
The company's global meat businesses, which have been hit by
some recalls in the past year, also improved from the second
quarter. But meat profits overall were "still well below" the
year-ago record level due to a cyclical downturn in the North
American beef business, the company said.
"You have this mix of cyclical trends coming together -- a
declining cattle herd, record high cattle prices, high feed
costs, the drought in Texas and slower demand as many people are
coming out of a slow period economically," Lisa Clemens, Cargill
spokeswoman, told Reuters. "It's been tough area from a supply
and demand curve."
The company's industrial unit earnings were also below a
year ago, hurt by sharply lower demand for deicing salt products
given an exceptionally mild winter across North America.
Earnings in its agricultural services were hit by a drop in
North American farm services income.
Cargill, which operates in 65 countries, is a leading U.S.
grain exporter, food processor, energy trader and biofuels
producer. If Cargill were a publicly listed company, its 2011
sales of $119.5 billion would have ranked No. 13 on the Fortune
500 list of largest U.S. companies.
The company said it continues to expand its global
processing and handling footprint. During the quarter Cargill
broke ground in Brazil on a second big corn wet milling facility
there; began enlarging its Tacoma, Washington, grain export
joint venture with U.S. farm co-op CHS ; and continued
construction of its third corn sweetener plant in China.