Cargill has reported an 82% slump in profit for the fourth quarter and a 56% drop for the fiscal year, citing cyclical trends in soybean processing and American beef, as well as wider economic and political factors.
The agribusiness giant said that the results fell short of expectations, although its food ingredients and applications business segment posted record results for the full year – the third year in a row of record earnings for the segment – with particularly strong performance in sweeteners, starches, specialty oils and cocoa worldwide, and in staple foods in several emerging markets.
Overall, Cargill reported $1.17bn in profit from continuing operations in the year ended May 31, 2012, down from a record $2.69bn a year earlier. For the fourth quarter, profit was $73m, down 82% from $404m in the prior year period.
"Cargill's earnings performance was not up to our expectations, though with notable exceptions," said Greg Page. "Our 26-unit food ingredients group delivered a third consecutive year of record earnings. One-third of our businesses exceeded last year's results, and nine achieved record profits.”
Consolidated revenues were up 12% for the full year, to $133.9bn from $119.5bn a year earlier. Fourth quarter revenues were $34bn, down 2% on the year-ago period.
The company also invested more than $4bn globally in acquisitions, new and expanded facilities, and capital improvements, Page said.
As a private company, Cargill does not publish its full financial results, nor give a detailed breakdown of performance across its five business divisions, but it said in a statement that its food ingredients and applications segment was the largest contributor to company results in both the fourth quarter and full year, although its animal protein businesses were “well below last year’s record level”.
Losses in cotton and sugar held down results for its origination and processing segment, which also had lower earnings in grain and oilseed processing; agriculture services results were “moderately down” from fiscal 2011; and the risk management and financial segment was “well below the prior year”.
"Cargill's global market analysis of supply and demand, and our trading expertise are long-standing strengths,” said Page. “Even so, we did not trade as well in this year's markets, which were driven as much by the economic and political environment as by the fundamentals. Cyclical trends in the global soybean processing and North American beef industries also were in play, decreasing margins in parts of Cargill's oilseed processing and beef processing operations."
Cargill added that its industrial segment was hit by lower demand for deicing salt products, due to an exceptionally mild winter across North America.