Meat behind drop in profits for Cargill

The processor reported Q4 earnings of $73m, an 82% drop from the from the $404m in the same period a year ago. Earnings for the 2012 fiscal year ended May 31 2012 were down 56%, from a record $2.69bn in the previous year. Q4 revenues were also down 2% to $34bn, atlhough stronger performance in Q3 meant that consolidated revenues for the fiscal year were $133.9bn, up 12% from $119.5bn in the prior year. Cargill said its food ingredients and applications segment was the largest contributor to earnings in both Q4 and the fiscal 2012 year. However, growth in this group – which encompasses both food ingredients and animal protein – were driven by food ingredients, which saw a small drop in profits in Q4, but record earnings for the year. Earnings from its animal protein group, on the other hand, were “well below” last year’s record level. The company said its meat businesses were one of the big drivers behind the drop in profits, with the exception of Central America, where results were strongly up for the year. Cargill blamed the poor performance of its US meat plants on the “cyclical downturn in North American beef” . Greg Page, Cargill chairman and chief executive, said: “Cargill’s earnings performance was not up to our expectations, though with notable exceptions. 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.” Page added that while Cargill prided itself on its global analysis of supply and demand, and trading expertise, this year’s markets 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,” he said. Cargill has cut its expenses by more than $400m over the year, and invested more than $4bn in acquisitions, joint ventures, new and expanded facilities, and improvements to its more than 1,200 facilities worldwide. Around $2bn was spent on the acquisition of animal nutrition company Provimi. Other meat-related investments include the purchase of Central American poultry and meat processor Corporación Pipasa, the formation of a joint beef venture in Australia and the development of an integrated poultry business in China. Looking ahead, Page said: “We are confident about Cargill’s ability to grow profitably, to help our customers to do the same, and to help build a more food-secure world.”

Meat behind drop in profits for Cargill

US processing giant Cargill has reported another profit plunge, with fourth-quarter and fiscal 2012 earnings below company expectations.

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