An abundance of cattle helped jump-start consumer appetite for beef this summer and drive Cargill Inc.'s profits up 66 percent in its most recent quarter.
The agriculture giant, based in Wayzata, showed a strong start to its new fiscal year Tuesday. The company said it earned $852 million in the three months ended Aug. 31, up from $512 million in the same period a year ago.
The performance contrasted with profit slides in several recent quarters. Executives said the improvement indicated that its new strategy implemented in recent years is paying off.
"We've been charting a new path to higher performance, and it's rewarding to see the many changes we've made resulting in gains across much of the company," David MacLennan, Cargill's chairman and chief executive, said in a statement.
Under MacLennan, Cargill reorganized its leadership structure to streamline decisionmaking and shuttered a number of facilities to minimize its expenses. The company is focused on better managing its vast portfolio, improving its supply chain and getting its good to market more efficiently.
"It's gratifying to see these changes come through," said Lisa Clemens, spokeswoman and senior director of investor relations. "If we are in businesses where we are not the best owner, we are making changes."
The company is also revisiting a number of investments, evident by a series of deals made in the last year.
Cargill has divested more than $2.4 billion in assets in the last 15 months. It sold two of its Texas cattle feedlots in an attempt to focus on segments of the beef market that are most profitable. Meanwhile, the company spent more than $3 billion on acquisitions last year, including Norwegian salmon-feed maker EWOS, which marked Cargill's entrance into cold-water aquaculture.
"We are really pleased in how the performance is coming through in those acquisitions, which allow us to serve a wider range of clients," Clemens said.
Cargill said it is profiting from an increase in North America's cattle supply and "a renewed consumer demand for beef."
Ultralow corn prices have made feeding and raising animals cheaper, which has contributed to the oversupply of cattle, pork and poultry. So far this year, beef production in the U.S. is up 6 percent, according to USDA data published on Sept. 22.
And while Cargill is also one of those corn sellers, its origination and processing segment, which includes grains, attributed a moderate increase in earnings last quarter to soybeans.
Poultry and eggs also saw increased earnings. Cocoa and chocolate helped lift earnings in Cargill's food ingredients segment, along with improvements in starches, sweeteners and food oils.
Petroleum and metals suffered weak demand last quarter.
Cargill, the largest privately held company in the U.S. by revenue, said its adjusted operating earnings rose 35 percent to $827 million from $611 million a year ago. Revenue was $27.1 billion, down from $27.5 billion a year ago.