Cargill Inc. on Wednesday posted lackluster results for its fourth quarter and fiscal year, but executives pointed to early successes from their new focus on agility and efficiency.
Low commodity prices and weakening economies among emerging markets are partly to blame for Cargill's struggles. The Wayzata-based agribusiness giant reported a modest net profit of $15 million for the three months ended May 31, the last quarter of its fiscal year. By contrast, Cargill reported a net loss of $51 million in the year-ago period, in part due to one-time costs.
The latest gain, however, was tempered by an unusual loss on an adjusted basis, which is more reflective of operations, of $19 million. In the same period a year ago, Cargill earned $230 million on an adjusted basis.
The company's quarterly and year-end results also reflect a company in transition. Cargill is the nation's largest privately held company with interests in businesses ranging from shipping to chocolate to wallpaper glue, but executives are taking a hard look at which units are the best fit for the firm.
In the past year, Cargill has bought and sold a number of businesses, large and small. It has divested more than $2.4 billion in assets, including its sizable pork and crop insurance businesses, and a steelmaking venture. Last month, it sold two of its Texas cattle feedlots and its agriculture retail stores in the Midwest.
"We are looking ahead as we position our company for higher performance and sustained growth," said David MacLennan, Cargill's chairman and chief executive, in a statement. "We have more work to do, but where we have already made changes we are seeing improved results."
Under MacLennan, the company's leadership was reorganized in December. Rather than two separate teams with nearly 30 people total, MacLennan set up a single 10-person team that will report to him.
"That has allowed us to increase our agility in decisionmaking," said Marcel Smits, Cargill's chief financial officer. "We are becoming more effective and efficient."
Cargill is focusing more on shifting consumer values that demand ethical treatment of animals and transparency in food. The company, a major ingredient supplier to foodmakers, is looking to balance its value of food security — which relies on genetic modifications to protect crops — with consumers' distrust of engineering in food.
The company spent more than $3 billion on acquisitions last year. It is betting big on aquaculture by investing an additional $500 million last year into EWOS, a Norway-based salmon feed maker that Cargill bought in 2015 for $1.5 billion.
Smits said Cargill will continue investing in sectors where it can be a large player or have capabilities "that are the envy of the industry."
The company's food ingredients segment was the largest contributor to the company's operating earnings. Its animal feed and protein business had a strong fourth quarter as it rebounded from poor performance in beef globally during the first three quarters.
Cargill's grain origination and process business, which includes exporting and trading, dropped significantly from a year ago due to sluggish global demand, low volatility and good weather in major growing regions. The unit lost money in the fourth quarter following some misplaced bets on prices of oilseeds and soybeans.
Industrial and financial services, Cargill's smallest unit, posted losses for both the fourth quarter and fiscal year. That unit's bright spots were its metals and energy businesses, which posted profits for the full year.
Revenue in the fourth quarter dipped 5 percent to $27.1 billion.
For the full fiscal year, Cargill's net profit rose 50 percent to $2.38 billion, but its adjusted operating profit was down 15 percent to $1.64 billion. Gains on sales of businesses, impairment charges, inventory adjustments and other items are left out of the adjusted number.
Full-year revenue dropped 11 percent to $107.2 billion as a result of lower commodity prices, a strong U.S. dollar and divestments.
Kristen Leigh Painter • 612-673-4767