CHICAGO/BENGALURU (Reuters) - Commodities trader Cargill Inc [CARG.UL] on Tuesday posted a quarterly profit rise of more than 19%, as the animal nutrition and protein business unit tapped into rising global demand for meat untainted by the spread of African swine fever in Asia.
Cargill said it was prepared for the changing demand patterns and the shift in global protein flows caused by the disease that has killed up to half of China’s hog herd since August 2018 and pushed Chinese pork prices to record highs.
The global markets for pork, beef and chicken have been reshaped as China has been scouring the world for new sources of meat.
The largest privately held U.S. company by revenue has seen both plant- and animal-based protein as crucial to its success in recent years. Cargill and other agricultural companies have been hit by a sour farm economy, adverse weather and the U.S.-China trade war.
Those strains are still being felt. Cargill said some of its regional origination and processing businesses, particularly in North America, were hurt by trade uncertainty and weather disruptions.
Cargill said adjusted operating earnings rose to $1.02 billion in the second-quarter ended Nov. 30, from $853 million a year earlier. (reut.rs/2usZnbh)
Net earnings rose 61% to $1.19 billion from $741 million a year earlier.
Minnesota-based Cargill’s quarterly revenue rose 4% to $29.2 billion.
Dave MacLennan, chairman and chief executive officer, said Cargill’s financial performance also got a boost from ongoing restructuring, including the divestment of its malt business and financial subsidiary CarVal Investors.
Other global grain traders have also been trying to shed poor-performing assets and invest in businesses with the potential for higher profit margins, such as specialty ingredients or meat production.
Rival Archer Daniels Midland Co sold its palm business in Brazil, as part of a portfolio overhaul - and announced on Tuesday that it has acquired a plant-based extracts company in Brazil called Yerbalatina Phytoactives.
Earlier this month, Bunge Ltd said ended its 13-year ownership interest in an Iowa ethanol plant, following industry struggles with thin margins and overproduction. And Louis Dreyfus Co (LDC) has overhauled its executive team and launched a cost-cutting plan.
Reporting by Arunima Kumar in Bengaluru and P.J. Huffstutter in Chicago.; Editing by Vinay Dwivedi and David Gregorio
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