Cargill Inc.’s more nimble approach to its business, which it adopted more than a year ago, appears to be working as the company posted strong results Wednesday.
The Minnetonka-based agribusiness saw its fiscal third-quarter profit rise 42 percent over the same period last year thanks to improved performance in sweeteners, bio-industrials, ocean shipping and chocolate.
The company is also settling into a pattern of shedding businesses with higher expenses and lower margin and looking for acquisition targets that are a better fit.
“We are eager to keep pursuing the opportunities that we are seeing,” David MacLennan, Cargill’s chairman and chief executive, said in a statement.
Cargill posted $650 million in net earnings for the quarter ending Feb. 28, up from $459 million a year earlier. Revenue rose 8 percent to $27.3 billion.
“We had strong results this quarter across our segments, evidence that we are on the right path forward,” MacLennan said.
Cargill is privately held and is not required to release detailed financial reports to the public. But the company does report adjusted operating earnings, which excludes, among other things, one-time events such as the large gains from various business divestitures at this time last year. That figure jumped 50 percent to $715 million.
Cargill’s food ingredient business was the largest contributor to its growth last quarter. The company’s diverse line of sweeteners, which ranges from high fructose corn syrup to stevia leaf extract, performed well.
Its cocoa and chocolate business, which has its origination in West Africa, saw strong earnings growth in the European market. The company also reported a favorable product mix in salts used for foods in North America and seasonal sales uptick in de-icing salts.
The food ingredient segment bounced back from a challenging period last year in Asia with the help of corn-based starches and sweetener sales in China and edible oils in India.
Earnings in Cargill’s animal nutrition and protein business rose significantly, but the numbers were bolstered by a weak comparative period last year. The segment’s growth rate slowed from the first half, but is still seeing the benefit from renewed demand for beef among consumers. Poultry gave the segment a boost in Southeast Asia, but an avian flu outbreak in Korea and competition in China and Russia softened sales volume.
The company’s segment called origination and processing, which includes its grain and oilseed business, trailed last year’s third-quarter earnings in part because of South America’s performance. There, the business faced a reduction in farmers’ selling and slower processing due to heavy rains in Argentina and decreased corn coming from Brazil following that nation’s drought last year.
But the segment’s earnings rose significantly in Asia Pacific thanks to soybean crush activities in China and greater grain trading in Australia. North America was the largest contributor to the unit’s earnings with its robust grain export volumes.
Cargill’s industrial and financial services segment benefited from a weak comparative period and a sharp rise in ocean transportation earnings due to improvements in the mining and steel industries. The company also saw returns from its asset management activities as well as the energy businesses.