Cargill's yearly profit drops 16% to $3.3 billion

Cargill CEO Greg Page has said he often learns more from his own company than from the media about what's going on in the world, thanks to far-flung offices operating in 68 countries. That worldview helped Cargill avoid some of the worst of the past year's economic headwinds, the company reported Tuesday.

Still, Cargill's annual earnings fell 16 percent amid volatile markets. The big food processing and commodities trading company earned $3.3 billion for the year, down from $3.95 billion the year before.

Earnings for the fourth quarter ended May 31 fell 69 percent, from $1.05 billion a year ago to $327 million. Fourth-quarter revenue fell 3 percent to $116.6 billion and cash flow from operations was $6.7 billion.

"All in all, a good story, we feel," Chief Financial Officer David MacLennan said in an interview Tuesday.

Reports on everything from crop progress to weather patterns, political uprisings, stranded ships and commodity prices stream into Cargill's Minnetonka headquarters every morning from employees in both hemispheres working in industries as diverse as grain, finance, biofuels and cocoa.

The information often gives Cargill an edge as it works as the world's middleman, trading grain, developing food ingredients and, increasingly, helping other companies change their products or chase after new markets and consumers.

Cargill, citing just such an example in its 2009 annual report published Tuesday, saw the early signs of a global economic slowdown as China's iron ore stocks grew and steel prices fell midway through 2008.

'Two halves'

"The year was a tale of two halves," Page said in a statement issued Tuesday. "Cargill posted record results through November. In the second half of its fiscal year, earnings slowed considerably as the world economy contracted for the first time in six decades."

The statement added that the company expects the effects of the global economic slowdown to "persist for some time."

To save money the company has told employees to "hunker down wisely" and avoid costs where possible without affecting performance. Conduct a videoconference rather than travel to a faraway meeting with colleagues, for example.

"A lot of common-sense stuff," said MacLennan.

"The path to economic recovery may well be uneven, but Cargill remains optimistic," Page said.

While it was still a profitable year for the agribusiness titan, the 2009 earnings report follows an era like few others in the company's history, when a retooling of the company and its mission near the start of the decade was followed by several years of surging profits. Then the world saw a historic runup in commodity prices, and Cargill profits flew even higher.

The company broke the $1 billion mark in annual earnings just six years ago. In fiscal 2008, it reported a 69 percent gain in annual earnings.

This past year, the company built its global supply of canola, cocoa, palm, soy and biofuels with new or expanded plants in Brazil, China, Ghana, Canada, France and the United States The year also saw the first sales of Truvia, a natural sweetener it developed in collaboration with the Coca-Cola Co.

Citing other ways in which the company responded to the difficult economy, its annual report said:

•The largest biscuit manufacturer in India dropped trans fats from its flagship product without changing the taste or price, thanks to a trans-fat-free palm oil and help from Cargill.

•And the company helped a North American paper manufacturer save $1 million annually by replacing a petroleum product used in the paper's manufacture with a Cargill product made out of corn.

Cargill, the largest privately held U.S. company, employs 159,000 people worldwide.