World Grain - November 2011 - 16

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Cargill reports first-quarter earnings drop
MINNEAPOLIS, MINNESOTA, U.S. — Cargill on Oct. 10 reported $236 million in earnings from continuing operations in the ﬁscal 2012 ﬁrst quarter ended Aug. 31, a 66% decrease from $693 million in the same period a year ago. Last year’s ﬁrst quarter included an additional $190 million in earnings from Cargill’s former majority investment in The Mosaic Company. First-quarter 2012 revenues rose 34% to $34.6 billion. “It was a tough quarter. With results down from recent levels, we’re focused on regaining our earnings momentum,” said Greg Page, Cargill chairman and chief executive ofﬁcer. “Cargill is backed by a strong balance sheet, with broad resources and capabilities, including those we are gaining from a diverse group of acquisitions over the past 12 months. We’re well prepared to invest and grow through innovation, our partnerships with customers and the resiliency built into our business mix.” Page said the change in Cargill’s results is due in large part to the persistently high degree of uncertainty in the global economic environment, which injected turbulence into commodity markets and limited prudent trading opportunities. The prevailing “risk-on, risk-off” dynamic in ﬁnancial markets also caused capital to move in and out of commodities rapidly, which reinforced taking a Page disciplined approach to risk-taking. Other factors included acquisition-related expenses and outlays related to the ﬂooding on U.S. inland waterways, which increased freight costs and required measures to be put in place to protect supply chains to customers. Among the ﬁve business segments, earnings rose in agriculture services due to crop input sales related to weather-delayed plantings and the demand for grain handling, storage and marketing services in the lead up to the North American harvest. Results in the origination and processing segment decreased from last year’s solid ﬁrst quarter, negatively affected by the combination of adverse weather, reductions in projected grain supplies and the weakening world economy. In the food ingredients and applications segment, the food ingredient businesses on a combined basis nearly matched last year’s recordhigh performance. Results among the segment’s animal protein businesses were weaker due in large part to higher livestock and feeding costs in North America relative to domestic demand. Cargill completed several previously announced acquisitions in the ﬁrst quarter of ﬁscal 2012, including Italian animal feed company Raggio di Sole Mangimi. Cargill announced in August a binding offer to acquire Provimi, a leading global animal nutrition company, for an enterprise value of €1.5 billion. The company is known for its broad nutritional expertise and portfolio of premixes, additives and feed ingredients. Cargill said the combination, which is expected to be completed by calendar year-end, will provide a full range of enhanced products and services for serving customers globally.

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November 2011 / World Grain / www.World-Grain.com

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World Grain - November 2011

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