Cargill today reported financial results for the fiscal 2018 first quarter ended Aug. 31, and proteins and food ingredients led the way.
Animal Nutrition & Protein carried its momentum from fiscal 2017 into the new quarter, with adjusted operating earnings up significantly from last year. Protein results in North America were lifted by brisk consumer demand for beef, strong exports and more abundant cattle supplies, resulting in better utilization of processing capacity.
Global animal nutrition nearly reached last year’s quarterly results. Gains attributable to sales of value-added feed additives and premixes were offset by market pressures in aqua feeds in Europe and swine in Vietnam. Global poultry slightly lagged the year-ago period, as somewhat weaker results in Central America trimmed strong domestic sales and exports out of Southeast Asia.
At the start of the quarter, Cargill acquired Pollos El Bucanero, a leading producer of chicken and processed meats in Colombia. Also in the protein space, Cargill invested in San Leandro, Calif.-based Memphis Meats. The young company is developing methods to cultivate meat directly from animal cells. Over time, cultured proteins could potentially complement conventionally produced meats as part of the equation to sustainably nourish the future.
In animal nutrition, Cargill completed the purchase of Southern States Cooperative’s feed business, which serves customers in the southeastern and eastern U.S. It also formed a partnership with Austria’s Delacon, a leading maker of phytogenic feed additives for the animal nutrition market. Both Cargill and Delacon seek to accelerate the growth of these natural, plant-based feed additives that support animal health.
“We’re off to a good start in our new fiscal year, powered by the significant work we’ve done over the last few years and continuing to accelerate our performance,” says David MacLennan, Cargill’s chairman and chief executive officer. “Even as market conditions vary across our sectors, our teams are delivering for our customers and achieving results to fuel future growth.”
Key results include:
• Adjusted operating earnings totaled $888 million, exceeding by 7% the $827 million earned in last year’s strong comparative period.
• Net earnings on a U.S. generally accepted accounting principles basis were $973 million, up 14% from $852 million a year ago.
• Revenues totaled $27.3 billion, edging ahead of last year’s $27.1 billion.
Food Ingredients & Applications was the second-largest contributor to company earnings, as continued attention to raising commercial capabilities and operating efficiencies yielded improved earnings. Cocoa and chocolate products, along with sweeteners and starches for food and other applications led results in most regions. The segment’s Asia-based businesses also realized improved volumes.
“The strength of our business rests in our people and communities,” MacLennan says. “In a fast-changing world, we are doing all we can to create a workplace where employees can excel, to empower people with the skills they will need for the jobs of tomorrow, and to support the communities where we live and work.”