January 12, 2011 / 2:30 PM / 9 years ago

UPDATE 3-Cargill profit surges on demand, large harvests

* Profit surges to $1.49 bln, four of five units gain

* Excluding Mosaic, earns $832 mln, vs $420 mln year ago

* Revenues in quarter rise 16 pct to $31.1 billion (Adds details, analyst comment, acquistions)

By Carey Gillam

KANSAS CITY, Mo., Jan 12 (Reuters) - U.S. agribusiness and trading giant Cargill [CARG.UL] posted sharply higher quarterly earnings on Wednesday, helped by strong growth from its leading fertilizer producer The Mosaic Company (MOS.N).

Gains in Mosaic’s business, tied to good demand amid rising global food prices, were a key reason the company more than tripled income for the quarter compared to a year ago.

But large North American grain harvests also helped push Cargill’s grain handling-related revenue higher, and the company’s origination and processing segment saw strong gains. Overall, four of the company’s five business segments saw earnings rise.

Crop prices have been rallying recently on strong global demand and worries about supplies. Corn, beans and wheat prices surged even more on Wednesday as the U.S. Department of Agriculture issued updated supply and demand data. [ID:nL3E7CC07F] [ID:nN12191465]

“Cargill generated strong results across the breadth of our businesses,” said Cargill CEO Greg Page.

Minneapolis-based Cargill said it posted net income of $1.49 billion in the fiscal 2011 second quarter that ended Nov. 30, compared with $489 million a year earlier.

Excluding earnings from its majority investment in Mosaic, Cargill earned $832 million, up from $420 million a year ago.

Don Roose, president of the US Commodities risk management firm, said Cargill’s diversity left it well positioned to capitalize on rising crop and food prices, even amid market volatility.

“Cargill, being an exporter, and having more vertical integration, it gives them the chance to work across the whole spectrum,” said Roose.

Results in Cargill’s food ingredients business were mixed, with some units seeing better volumes and gains from risk management activities and others pressured by higher raw material costs,though overall segment earnings increased moderately.

Earnings decreased in the risk management and financial segment, reflecting sluggish demand in range-bound energy markets.

Still, second-quarter revenue rose 16 percent to $31.1 billion.

Cargill is one of the world’s largest private corporations and is an international producer and marketer of food, agricultural, financial and industrial products and services and is among the world’s top grain processors and leading exporters of grains, cotton and oilseed products.

While Cargill is private, investors have been piling into Mosaic, pushing its shares higher as strong U.S. crop prices lead to expectations for a sizable U.S. spring planting season and good sales of Mosaic fertilizer.

Cargill owns roughly 64 percent of Mosaic’s stock.

Cargill also said on Wednesday it was expanding its cocoa and chocolate business in Europe through the acquisition of a German chocolate maker.

Cargill is buying Schwartauer Werke GmbH & Co. KG Kakao Verarbeitung Berlin, (“KVB”), which has two production plants in Berlin.

During the second quarter, Cargill agreed to acquire Unilever’s (ULVR.L) shelf-stable condiments business in Brazil. The purchase, which includes leading brands in tomato sauce and paste, and a processing facility, is expected to be completed in the first quarter of 2011.

Cargill also has agreed to acquire a majority share position in an Indonesian company that produces a wide range of starch and starch-based products, which also is to be completed in the first quarter of calendar 2011.

And Cargill is buying Calgary-based Agrium Inc’s AGU.TO AWB commodity management business. (Reporting by Carey Gillam, editing by Dave Zimmerman)

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