The Minnesota-based agri-giant released details about its fourth quarter, and full-year earnings on Thursday [July 11]. The company’s fourth quarter and full fiscal year ended May 31.
Overall, the company saw a decline both in results for the quarter and for the full year, Cargill said.
The adjusted operating earnings for the quarter fell 41% from $809m last year to $476m, Cargill said. For the full year, earnings declined 12% to $2.82bn.
Net earnings on a US GAAP (generally accepted accounting principles) basis for the quarter were $235m, a drop of 67% from last year, the company said. Earnings for the year fell 17% to reach $2.56bn.
Similarly, revenue in the fourth quarter dropped 1% to $29.9bn and declined 1% for the full year reaching $113.5bn, Cargill reported.
The declines in company results follow the “top performance” witnessed in the final quarter of last year, said Lisa Clemens, senior director in investor relations with Cargill. “The current quarter was up against a big comparable,” she added.
“At that time, our origination and processing segment posted its best fourth quarter in seven years due to increased grain origination in the US, good results in oilseed processing, and renewed volatility in commodity markets,” she told FeedNavigator.
“[The] animal nutrition and protein segment had a solid fourth quarter in fiscal 2019, and it was even stronger in the same period a year ago,” she said. “As is still true, domestic and export demand for beef and eggs was strong.”
Segment highlights
Within the company’s business segments, animal nutrition and protein was the largest contributor to Cargill’s earnings in the fourth quarter, the company reported.
However, the results also were down from the fourth quarter in 2018, said Clemens. “On an absolute basis, the segment was the largest contributor to earnings in the current period,” she added.
The reduction in feed demand from China and other countries in Asia following the outbreak of African Swine Fever was one of the market disruptions that reduced earnings for animal nutrition, Cargill said.
Protein results in North America saw challenges from spring flooding in the Midwest, which slowed cattle shipment, and cool weather, which hindered the start of the grilling season, Cargill said. However, both the domestic and international demand for beef products were strong, as was domestic interest in value-added eggs.
Results for global poultry production dropped following a series of “market and operating challenges” in multiple regions, the company said.
Also, during the fourth quarter, Cargill invested in new poultry production facilities in China and continued work on a new premix and specialty feed plant in the Jiangxi province, the company said. The company opened a new premix facility in Jordan to serve markets in North Africa and the Middle East.
Cargill’s origination and processing segment also had challenges stemming from Asia, however, these related to the continuing uncertainty with the US-China trade relationship, the company said. Especially for corn and soybeans, that ongoing situation has “overridden global supply-and-demand fundamentals and disrupted trade flows.”
Poor weather also hampered grain transportation and marketing, the company said. Biodiesel profits lowered returns in Europe, while small crops in Paraguay and the crush environment in Argentina negatively influenced earnings in South America.
Results for the food ingredients and applications segment also saw challenges with most businesses seeing weaker results than last year, the company said. Only salt sales improved, although, several product lines saw development in Asia.
The only business segment to see an improvement in the final quarter of 2019 compared to 2018 was industrial and financial services, the company said.
