Cargill Inc.’s grain handling and meat businesses anchored a big increase in profits during the agribusiness giant’s latest quarter.
Minnetonka-based Cargill, one of the world’s largest privately held companies, posted a 41 percent jump in profit to $784 million during the three months ended Nov. 30, its fiscal second quarter. Revenue fell 8 percent to $30.3 billion. The company’s revenue pivots partly on commodity prices, which were low during its last quarter.
“With first-rate performance in our agricultural, animal nutrition and meat businesses, Cargill posted strong results, outpacing recent quarters by a good margin,” David MacLennan, Cargill’s CEO, said in a statement.
He added that Cargill’s meat processing and animal feed businesses have gotten a boost by a growing worldwide demand for protein.
Cargill’s grain origination and processing business — the largest contributor to its profits — saw earnings rise considerably over a year ago. The business was buoyed by record soybean and corn harvests in the United States combined with strong domestic and export demand.
Cargill’s grain origination business includes soybean crushing, which generally was a hot business this fall. Soybeans are crushed and processed into oil and meal, the latter for animal feed. “The soybean meal market took off,” said Ed Usset, a grain marketing specialist at the University of Minnesota’s Department of Applied Economics.
Cargill’s animal feed and protein business — which covers meat processing — had a significant increase in earnings. Results were led by Cargill’s Australian beef business and its U.S. cattle feeding and pork processing operations. Also, Cargill’s U.S. turkey business had one of its best Thanksgiving holiday seasons.
The Australian beef business has been particularly strong due to a combination of drought in that country and rising Asian demand for beef. As the drought has made cattle feed dear, ranchers are bringing cows to slaughter early, driving down input prices for beef processors.
Cargill’s food and ingredients business, which covers everything from chocolate to brewers malt, experienced a decrease in profits from a year ago. However, excluding a charge for the closing of Cargill’s corn mill in Memphis, profits in the food and ingredients business were up “moderately.”
Results were mixed in Cargill’s industrial and financial services segment, the smallest of its four major business units, normally making up less than 10 percent of Cargill’s total earnings.