As Cargill continues to expand its global supply chain, the company yesterday reported a 19 percent rise in its second quarter net earnings.
The US agribusiness firm has announced that it made $495 million for the 2006 second quarter ended November 30, up 19 percent from last year's $415 million.
However, year-earlier results included a $597 million noncash net gain related to the formation of The Mosaic Company, a fertilizer company based in Minneapolis.
"Cargill delivered a solid quarter in a period marked by high energy prices and operational disruptions at the U.S. Gulf in the wake of Hurricanes Katrina and Rita. Our team did an excellent job serving customers and managing costs," said Warren Staley, the company's chairman and chief executive officer.
Cargill's earnings were led by two segments: its origination and processing segment, which connects users and producers of grains, oilseeds, sugar and other commodities, and its risk management and financial operations, in particular the value investing activities.
Other large contributors included the company's US-based farm services, which benefited from large US corn and soybean crops, the US-based food ingredient businesses and the global group of poultry and pork businesses.
The strong solid results come on the back of a number of recent acquisitions. In November, Cargill and joint venture partner Temasek Holdings, an Asia investment group headquartered in Singapore, acquired UK-based CDC Group's palm plantation interests in Indonesia and Papua New Guinea. Cargill's existing plantation in Sumatra also became part of the new joint venture.
"Demand for palm oil is growing globally and production worldwide is about 30 million tons. The venture enables Cargill to provide customers with a high-quality supply of palm oil products and adds further diversity to the company's portfolio of edible oil offerings made from corn, soybean, rapeseed, cottonseed and sunflowerseed," said the company.
And in early September, Cargill purchased two grain elevators in the Krasnodar region of Russia and a grain import-export terminal in Rostov on the River Don. A fourth facility, a grain elevator located in Russia's Voronezh region south of Moscow, was purchased in early December.
The company said it expects these acquisitions to improve its ability to serve customers in Russia with raw materials originated in the Black Sea region.
In the US, Cargill said it would form a joint venture with Louisiana Sugar Cane Products, a cooperative of 10 Louisianan sugar cane mills and 700 growers, to construct and operate a large sugar refinery in Reserve, Louisiana.
"The facility is aimed at providing US food and beverage makers with refined sugar products. The joint venture expects to break ground this spring and be ready to commence operations two years later," said Cargill.
The company also announced plans to add a 110-million-gallon-a-year ethanol plant to its corn processing complex in Blair, Nebraska. The new facility is expected to more than double Blair's existing ethanol capacity and raise Cargill's US ethanol production capacity to 230 million gallons annually.
Cargill also is expanding in biofuels in Europe. It is building a biodiesel plant in southwest Germany in Frankfurt/Main. The company currently operates a biodiesel facility in Wittenberge, south of Hamburg, in a joint venture with Agravis Raiffeisen.