Cargill Inc.'s quarterly earnings dropped 26 percent from a year ago as its grain and food ingredients businesses — two of its biggest operations — fell short on the profit front.
The Minnetonka-based agribusiness colossus said Tuesday its fiscal first-quarter earnings were $425 million, down from $571 million a year ago. Sales for the quarter ended Aug. 31 were $33.3 billion, down 2 percent over last year's first quarter.
"Although Cargill's first quarter was not as strong as last year, we had several areas of good performance and are optimistic about the opportunities ahead," Cargill CEO David MacLennan said in a prepared statement.
"This year's big crops, not just in North America but across agricultural production areas worldwide, will enhance food security after several years of weather disruption. Our company is well positioned to connect these new supplies to growing demand."
MacLennan also noted that Cargill made "good progress" in efforts to improve efficiency and accelerate the pace of "technology and process improvements." Those efforts have included outsourcing some of Cargill's information technology services to India-based Tata Consulting, effectively cutting 600 IT jobs globally.
When the outsourcing was announced in March, Cargill was expected to lay off as many as 300 people in the Twin Cities, primarily in Hopkins. By early July, the number of actual layoffs was 169 in Hopkins. On Tuesday, Cargill updated that count to about 250.
During the first quarter, Cargilll's grain origination and processing business, which accounts for about 40 percent of Cargill's earnings, posted first-quarter results slightly below the same time a year ago. Cargill's food ingredients business, which includes everything from brewers' malt to cocoa, recorded moderately lower earnings over a year ago.
The food ingredients operation, which accounts for roughly 37 percent of Cargill's profits, experienced softer sales volume, hurt by sluggish economic conditions in a number of countries, the company said. However, Cargill's ethanol business, which is housed in its food ingredients division, had a good quarter due to strong demand.
Cargill's animal nutrition and protein business, which includes its animal feed and meatpacking operations, posted a moderate rise in profits during the first quarter. Meat led the way, with good beef business results in North America and Australia. The company's global poultry business — stretching from Thailand to Latin America — also fared well.
Cargill noted, too, that the expected shortage of hogs — due to a pig virus epidemic — was less detrimental to the company's U.S. pork business than anticipated, allowing for a good quarter. Porcine epidemic diarrhea virus (PEDv) has swept through U.S. hog farms this year, killing piglets at a high rate.
Cargill's earnings in its animal feed business were down slightly during the quarter. But that was because Cargill booked a gain on the sale of a milling business in Europe during last year's fourth quarter, making for a tough comparison.
Mike Hughlett • 612-673-7003
