Cargill's poultry efforts suffer in Central America and Southeast Asia
USA (Reuters) - Grains trader Cargill Inc on Thursday reported a 20 percent drop in its fiscal second-quarter 2019 net earnings, as global trade tensions hit the bottom line along with challenges in the Chinese hog sector and a struggling US dairy business
4 January 2019
3 minute read
By: Words P.J. Huffstutter
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 of units, particularly its protein and food ingredients divisions, both of which have been strategic growth areas.
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 US 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 chairman and chief executive officer.
The privately held company said its net earnings on a US GAAP basis for the quarter ended 30 November 2018, were $741 million, a 20 percent decline from $924 million for the same period a year earlier.
Cargill's second-quarter revenues fell 4 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 "strong" oilseed processing results in North America and Europe, while grain exports from the US 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 US-China trade fight dragged on its ocean transportation business due to uncertainty in the freight markets. And 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.
Reporting By P.J. Huffstutter Editing by Chizu Nomiyama, Jonathan Oatis and David Gregorio
Ryan Johnson
Ryan worked in conservation from 2008 to 2017, during which time he operated a rainbow trout hatchery and helped to maintain public and protected green spaces in Canada for the Toronto and Region Conservation Authority. As editor of The Poultry Site, he now writes about challenges and opportunities in agriculture across the globe.
