Milling & Baking News - January 22, 2013 - 16

Financial Results 

Cargill earnings move higher
in second quarter
MINNEAPOLIS — Boosted by earnings
gains in four of its five business units,
overall net income at Cargill rose to
$409 million in the second quarter ended Nov. 30, 2012, up sharply from $100
million in the same period a year ago.
Revenues in the second quarter also increased, climbing 6% to $35.2 billion.
“Cargill posted a solid second
quarter, with earnings balanced and
diversified across the breadth of the
company,” said Greg Page, chairman
and chief executive officer. “The steps
we’ve taken over the past months to
focus attention on what our customers value most, change how we work,
instill more cost discipline and invest
in growth are paying off in the current
year. Most importantly, these changes are key to delivering sustainable
growth year in and year out.”
Strong global trading and risk management results in more fundamentally
driven markets and an improved margin environment in oilseed processing
in several regions boosted earnings in
Cargill’s origination and processing segment to well above the year-ago level.
Improved earnings also were noted
in the agriculture services segment,
driven in large part to better operating
results in animal nutrition, the company said. Cargill said rising feed ingredient costs were a challenge, but the
integration of Provimi enhanced performance in the segment. Cargill said
Provimi has brought more nutritional
expertise, technology and products to

the portfolio since the company was
acquired in 2011. The North American farm services businesses benefited
from large grain shipments in Canada,
but the impact of drought-reduced
crops in the Midwest held U.S. results
below the year-ago level, Cargill said.
Cargill’s risk management and financial segment reversed course
from a year ago, rebounding from a loss in
the second quarter of fiscal 2012 to post an earnings gain in the second quarter of fiscal
2013. Last year’s results were bogged
down by a period when financial markets were stressed by debt turmoil in
the United States and Europe. More recently, the segment’s asset management
activities established a better position in
which to benefit from stronger financial
markets and improved investor sentiment. The segment’s energy businesses
were essentially flat with last year on a
combined basis.
Earnings rose in Cargill’s industrial
segment, although deicing salt production volume lagged typical levels due
to the inventory carryover from last
year’s mild North American winter.
The one segment that did not post
an earnings gain in the second quarter
was the food ingredients and applications segment, which eased from the
year-ago quarter. The segment is made
up of two groups of businesses: food
ingredients and animal protein.

CHS earnings fall as ag business
proﬁt softens in quarter
ST. PAUL, MINN. — Net income at
CHS Inc. fell 17% to $343,707,000 in
the first quarter of fiscal 2013 ended
Nov. 30, down from $416,208,000 in
the same period a year ago.
Revenues, meanwhile, increased 20%
to $11,709,938,000 from $9,734,159,000.
CHS said the sales gain reflected continuing strong values for the energy,
grain and crop nutrients products that
make up the majority of CHS’s business.
The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of
$122,639,000 in the first quarter of fiscal 2013, down 4% from $128,107,000
16 / January 22, 2013 Milling & Baking News

in the same period a year ago. Sales in
the segment totaled $8,501,741,000, up
32% from $6,449,821,000 a year ago.
“Our grain marketing earnings decreased by $14.8 million during the three
months ended Nov. 30, 2012, compared
with the three months ended Nov. 30,
2011, primarily as a result of decreased
margins,” CHS noted in a Jan. 10 filing
with the Securities and Exchange Commission. “Our processing and food ingredients businesses experienced an increase in earnings of $5.6 million for the
three months ended Nov. 30, 2012, compared to the same period of the previous year, primarily related to increased
margins from our soybean crushing and
refining businesses.”

“Combined earnings in food ingredients were down moderately from
last year’s strong performance,” Cargill said. “The slippage was mostly
related to excess capacity in the North
American ethanol market and the return of profits in some product lines
to more normalized levels. The animal protein businesses posted a combined profit compared with a loss
last year when processing margins in
the U.S. beef industry
were sharply negative.
Most of the meat businesses benefited from
improved volumes or
margins in the current
period, even though
results were tempered by higher raw
material or livestock feeding costs.”
Cargill said it has shifted capital
spending from acquisitions toward
new, expanded and modernized facilities that support the growth objectives
of customers and the company.
“We have a record $2.4 billion of
large projects under construction in 13
countries,” Mr. Page said. “As these
facilities come on line, they strengthen
Cargill’s supply chain, risk management and innovation capabilities. We
want our customers and stakeholders
to think of Cargill first when they are
looking for a solution or an opportunity. These investments help us better
serve their needs and become the partner of choice.”
For the six months ended Nov. 30,
earnings totaled $1.38 billion, up from
$336 million in the same period a year
ago. Net revenues rose to $69 billion
from $67.9 billion. MBN
The company’s share of earnings
from its 50% ownership of Ventura
Foods, L.L.C., a vegetable oil-based
food manufacturing business, improved due to stronger margins, while
those from its 24% CHS share of Horizon Milling, L.L.C., a wheat miller,
remained flat compared with the same
period in fiscal 2012.
Energy earnings in the first quarter of
fiscal 2013 fell 26% to $296,915,000 from
$398,903,000, while sales decreased 2%
to $3,324,228,000 from $3,396,974,000.
CHS said that during the three months
ended Nov. 30, the company sustained
a loss on the mark-to-market for its
refinery margin hedges of $42.3 million compared with a net gain of $113
million during the same period of the
previous year. Without this impact,
margins in the company’s refined fuels
would have improved, CHS said. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - January 22, 2013

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