CHICAGO, Ill. (Reuters) — Grains trader Cargill Inc. has reported a 20 percent drop in its fiscal second-quarter net earnings, as global trade tensions, challenges in the Chinese hog sector and a struggling U.S. dairy business hit the bottom line.
Three of the company’s four business units reported results that were below the same period a year earlier.
While demand remained strong at the company’s beef business in North America, Cargill said political and marketplace headwinds hurt many units, particularly its protein and food ingredients divisions, both of which have been strategic growth areas.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Political instability in Central America and market challenges in Southeast Asia ate into its poultry efforts, the company said. Meanwhile, earnings for its starches and sweeteners business slumped as U.S. ethanol prices hit historic lows and raw material costs rose in Europe.
“We are pushing to ready our businesses for the future with continuous improvement, financial discipline and a disruptive mindset,” said Dave MacLennan, Cargill’s chair and chief executive officer.
The privately held company said on Jan. 3 that its net earnings on a U.S. GAAP basis for the quarter ended Nov. 30, 2018, were US$741 million, a 20 percent decline from $924 million for the same period a year earlier.
Cargill’s second-quarter revenues fell four percent to $28 billion, bringing the year-to-date figure to $56.7 billion. The company’s quarterly adjusted operating earnings were $853 million, down 10 percent from $948 million.
One bright note was the company’s oilseed processing results in North America and Europe, while grain exports from the U.S. and Canada, biodiesel production in Europe, and better crop yields in Argentina boosted the company’s origination and processing unit’s performance, Cargill said.
Processors including Cargill have benefited from increasing global demand for soymeal and from soybean prices being near 11-year lows.
But the U.S.-China trade fight dragged on Cargill’s ocean transportation business due to uncertainty in freight markets.
The company’s industrial and financial services performance was off from the year-earlier quarter, “due in part to broader weakness in financial markets that negatively affected Cargill’s investments in managed funds,” the company said.
