Animal feed, protein demand boost Cargill’s second quarter
The Minnesota-based agro-giant announced the results for its second fiscal quarter and first six months on Tuesday [January 7]. The company’s second-quarter ended November 30.
Overall, the quarter saw revenue increase 4% to $29.2bn and six-month revenues grew 3% to $58.2bn. Cargill saw market challenges and political instability negatively influence results for the same period last year.
Adjusted operating earnings increased 19% from last year, reaching $1.02bn from $853m, the company said. Adjusted earnings for the first half of the 2020 fiscal year were $1.93bn.
Similarly, net earnings on a US GAAP basis were $1.19bn for the quarter – an increase of 61% from the previous year.
Cargill’s company-wide results were supported by positive developments for animal nutrition and protein along with industrial and financial services, the company said.
The company’s internal changes, acquisitions and new capabilities helped improve performance, said Dave MacLennan, Cargill’s chairman and CEO. Cargill’s global teams also demonstrated “good execution” throughout the quarter, he added.
Animal nutrition, protein and business segment highlights
Throughout Cargill’s business segments both industrial and financial services and animal nutrition and protein saw adjusted operating earnings increase. However, origination and processing and food ingredients and applications saw an earnings decline, it reported.
Global protein sales saw opportunities from changes in demand and fluctuation in the flow of global protein related to African Swine Fever and other market forces, the company said.
The business also saw improved performance from the management of materials costs and a boost from the ramp-up of the company’s new shrimp feed facility in Ecuador, said Lisa Clemens, senior director of investor relations with Cargill.
“Our protein business, including beef in North America, has seen very strong demand at home and abroad – that’s been steady,” she told FeedNavigator. “In terms of improvement, both our animal nutrition and poultry businesses are having a much stronger year than the prior one.”
In animal nutrition, results for compound and aquaculture feeds have been strong, she said. On the protein side, poultry has had improvements in Asia and Europe.
“For global poultry, we saw benefits shining through from last fiscal year’s acquisition of Konspol in Poland and Campollo in Colombia,” she added.
Internal efforts, acquisitions and capital investments supported the improvements in animal nutrition and poultry, Cargill reported.
“In animal nutrition, we’ve made a number of valuable acquisitions over recent years, such as Diamond V in Iowa and an investment in Delacon in Austria in fiscal 2018; an investment in Agriness in Brazil in fiscal 2019 (swine technology management) and others,” added Clemens.
Although Cargill’s agricultural product trading business remains involved across commodities, select regional origination and processing businesses continued to be negatively affected by ongoing trade uncertainty and weather – especially in North America, the company said.
Global product lines for food ingredients, like starches and sweeteners, had worse results than last year, the company reported. But, strong sales in cocoa and chocolate partially offset the decline.
During the second quarter, Cargill also announced that it is working to limit greenhouse gas emissions in its global supply chains by 30% per ton of product in the next 10 years. The goal builds off an earlier plan to reduce emissions from operations by 10% by 2025. Part of the project includes accelerating the Beefup Sustainability initiative, the company added.