* March-May volatile energy and financial markets weigh
* Cargill Q4 revenue rose 32 percent
* Full-year earnings $2.69 billion, up 35 percent
* Full-year revenues $119.5 billion, up 18 percent
(Adds byline, CFO comments, background)
By Christine Stebbins
CHICAGO, Aug 9 Giant U.S. agribusiness and
trading firm Cargill Inc [CARG.UL] said earnings fell 7 percent
in its fiscal fourth quarter, hit by volatile energy markets
and weaker risk management and food ingredient results.
Minneapolis-based Cargill, one of the world's largest
privately held corporations, reported $404 million in earnings
from continuing operations in the quarter ended on May 31,
compared with $435 million a year earlier.
But Cargill, a top U.S. grain exporter, biofuels producer,
food processor and energy trader, also reported fourth-quarter
revenue rose 32 percent to $34.8 billion.
"The past year presented a challenging operating
environment," Cargill CEO Greg Page said in a statement. "From
weather-related supply shocks in food commodities, grain export
restrictions and rising energy prices to the uneven global
economic recovery, looming sovereign debts and deficits,
political unrest and natural disasters -- the uncertainty led
to volatile prices across a range of raw materials."
For the quarter, earnings fell in risk management and food
ingredient businesses but rose in Cargill's grain origination
and processing, agricultural services, and industrial sectors.
Year results in four of five basic business units rose.
"Results declined in risk management and financial for the
quarter and the year due to lower earnings among the energy
businesses," Cargill said in detailing its results.
"The energy trading piece -- volatility was pretty much
against them at that point," Cargill Chief Financial Officer
Sergio Rial told Reuters in an interview, saying Cargill's
traders "were not well positioned during that quarter."
The whipsaw action in oil prices during the quarter,
including a $10 plunge in crude oil on May 5 and a relentless
widening of the spread between U.S. crude and European Brent,
hurt earnings at several other market titans from Goldman Sachs
(GS.N) to BP (BP.P) to oil trader Phibro, analysts have said.
"It's a quarter...it's one-off," Rial said of the energy
trading, "It's still 7 percent down but we don't find that to
be of significance to justify any structural change. You do
have quarters where trading results are not what you expect."
MOSAIC STAKE SALE ADDS GAINS
Full fiscal year revenues rose to $119.5 billion, up 18
percent from $101.3 billion the prior year. Cash flow from
operations was $4.6 billion compared with $3.3 billion a year
earlier, underscoring Cargill's fundamental strengths.
Full-year earnings from continuing operations totaled $2.69
billion, a 35 percent jump from a year before.
Rial said Cargill's recent decision to recall 36 million
lbs of fresh and frozen ground turkey products tied to an
outbreak of an antibiotic-resistant Salmonella strain that has
sickened 77 people and resulted in one death in California
was a top priority for the company.
Rial said financial impact of the turkey recall "should not
be material" to earnings, but "we take this case very
seriously. Food safety is very important for our meat
Cargill said it recorded an additional $359 million in the
fourth quarter from discontinued operations, income
attributable to Cargill's former majority investment in
fertilizer maker Mosaic Co (MOS.N).
The company also recognized a one-time accounting gain of
$11.49 billion on the May 25 distribution of its Mosaic shares,
which were exchanged for Cargill stock and Cargill debt.
Cargill said in January it would spin off its 64 percent
stake in Mosaic to maintain its private company status while
enabling Cargill family trusts to diversify their holdings.
STAYING IN ACQUISITION MODE
In fiscal 2011, Cargill also said it invested more than $3
billion in acquisitions and new or expanded facilities.
The company acquired AWB's commodity management business in
Australia, Unilever's condiments business in Brazil, Indonesian
starch and sweetener maker PT Sorini Agro Asia Corporindo Tbk,
Royal Nedalco's potable alcohol operations in Europe, a Chinese
port facility, a Canadian grain facility and a U.S. corn wet
mill ethanol facility.
Among its plant expansions are animal feed mills in Russia
and Vietnam, poultry processing operations in Thailand, a
sweetener facility in China and food innovation centers in
Brazil and the U.S.
(Reporting by Christine Stebbins, editing by Dave
Zimmerman, Gerald E. McCormick and Gunna Dickson)