* Job cut decision "makes sense" given weak economy
* Cargill's layoffs not cause for rating change
By Christine Stebbins
CHICAGO, Dec 5 The decision by commodities
giant Cargill Incto cut about 2,000 employees from
its global payrolls was prudent given world growth prospects, a
Fitch Ratings analyst said on Monday.
"They were probably looking at their overall business with
weaker performance in the first quarter and the slowing
economy, it just makes sense," said Judi Rossetti, analyst with
"Given Cargill's global size and scale those announced
layoffs are not of a magnitude that would be any cause for
concern or impact the company's credit rating," she said.
Though the layoffs are a small percentage of its overall
work force -- 1.5 percent of its 138,000 employees in 63
countries -- the job cuts caught the attention of commodity
traders globally as Cargill sits at the center of world
Like Cargill, other big commodity firms such as Noble Group , Archer Daniels Midland and Bunge have
all recently reported disappointing quarterly earnings.
Cargill said the cuts, which will take place over the next
six months, were made on recommendations from its various
business units and was not a "uniform across-the-board" cut.
"At this time, we do not have any breakdowns. We do know
they will not be concentrated in any one city, country or
region," Lisa Clemens, Cargill spokeswoman, told Reuters on
"Cargill did have poor operating performance in the fiscal
first quarter. However, quarter-to-quarter volatility is common
among agribusiness companies," Rossetti said.
Cargill earnings for the quarter ended Aug. 31 were down 66
percent at $236 million, with the company citing economic
uncertainty and volatile commodity markets. But 2011 earnings
were up 35 percent at $2.69 billion and full-year revenues
reached $119.5 billion, up 18 percent from 2010.
Both Fitch and Standard and Poor's, after those
first-quarter earnings, still rated Cargill's latest $500
million in 20-year notes as investment grade "A," affirming the
company's long-term prospects.
"Our view of its financial profile reflects a highly liquid
balance sheet ... less reliance by Cargill on earnings
contribution from the company's risk management and financial
segment ... and our belief that the company will maintain
credit measures that are indicative of those consistent with an
intermediate financial profile," S&P said on Nov. 7.
"What we look at is annual results and the outlook for the
medium term," Rossetti said on Monday.