Cargill reports Q1 earnings surge
first quarter shot up, benefiting from a "new level of market
The firm, which is privately held, said net earnings reached $917m for the 2008 first quarter ended August 31 2007, up 83 percent from $500m last year. "Cargill is off to a strong start in the new fiscal year. June through August was an extraordinary period, with growing demand for agricultural commodities against tightening supplies and a long anticipated but dramatic reduction in liquidity and leverage in financial markets. All of this sparked a new level of market volatility," said Greg Page, Cargill chairman and chief executive officer in a statement today. The company said its growth in the period was led by its origination and processing segment, which sources, processes, markets and distributes agricultural commodities and provides supply chain and risk management services to customers globally. Cargill said its food ingredients and applications segment, as well as its industrial segment also outperformed last year's first-quarter earnings. The agriculture services segment, which serves crop and livestock producers, "edged ahead" of last year's results, while the firm's risk management and financial segment was "moderately" below the year-ago level. The firm today highlighted its focus on canola expansion, following the announcement in August this year that it would build a second canola processing plant in Canada in a move to meet growing demand for tans fat-free oil.The new plant will be located adjacent to Cargill's existing operation in Clavet, Saskatchewan, and is expected to double the firm's oilseed processing capacity to 1.5m tons annually. Cargill said the added crush capacity is supported by strong demand for hi oleic canola oil in addition to growing demand for generic canola oils. Cargill's capacity expansion, which is due to be completed by November 2008, positions Canada as a world leader in the supply of 'high quality' vegetable oil, said the firm. In May this year, Cargill Specialty Canola Oil also announced plans to open a 150-acre specialty canola research farm in Canada which will develop high yield traits to meet expected surging demands in the future. The research farm in Aberdeen, Saskatchewan, is located about 30 miles from the company's canola crush facility in Clavet, and aims to focus on developing the next generation of output traits. Cargill also said today that it has begun the process of purchasing the remaining shares of Agrograin, a Hungarian grain company in which it bought a minority interest and formed a joint venture in 1995. The acquisition supports the further development of Cargill's grain and oilseeds origination capacity in central and east Europe, it said.