MINNEAPOLIS – Cargill reported an 8% increase in the company’s adjusted operating earnings for the third quarter ended Feb. 28, 2019, with the Animal Nutrition & Protein business making the largest contribution to results.

Adjusted operating earnings were $604 million compared with $559 million earned in the third quarter of last year. Net earnings on a US GAAP basis for the quarter were $566 million, up 14% from $495 million in the year-ago period.

Third-quarter revenues eased 4% to $26.9 billion.

“Disruptions and uncertainty in the global business environment continued to present challenges during the quarter, but our teams captured greater efficiencies across the company,” said Dave MacLennan, chairman and CEO. “We remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so they can win with consumers in local markets.”

For the first nine months ended Feb. 28, 2019, adjusted operating earnings slipped 2% to $2.34 billion. Net earnings for the period declined 3% to $2.33 billion.

Year-to-date revenues were $83.5 billion.

On a segment basis, strong domestic and export demand for beef coupled with consumer demand for egg products lifted earnings in Cargill’s Animal Nutrition & Protein business. The company’s global poultry results declined on higher production costs at the company’s poultry processing joint ventures in the Philippines and the United Kingdom. However, the addition of Campollo in Colombia and Konspol in Poland both got off to a strong start following Cargill’s acquisition of the companies. Meanwhile, outbreaks of African Swine Fever in China and Europe, along with unfavorable dairy economics in the US weighed on animal nutrition results in total which trailed the prior year, Cargill reported.

Results were mixed in the Food Ingredients & Applications business. Historically low ethanol prices in North America and higher costs for energy and raw materials in Europe dragged earnings lower in starches and sweeteners. A strong cocoa and chocolate performance was offset by lower sales volume and higher operating costs in North America. Earnings in edible oils pulled advanced on good positioning and operating efficiencies. In North America, severe winter weather slowed bio-industrial sales to the road construction industry. However, icy and snowy road conditions drove demand for de-icing products. Meanwhile, sales of salts for food and water quality applications also contributed to improved salt results.

Cargill stated that ongoing trade tensions and other supply chain disruptions created a challenging business environment for the company’s Origination & Processing segment.

“In North America, soy and canola crush operations ran at high capacity, but the near absence of the Chinese market for plentiful US soybean stocks reduced profitability,” the company said. “The trade turbulence also negatively affected soybean crush operations in China, as did lower demand for soybean meal for feed following the culling of hogs to control the spread of African Swine Fever.”

Additionally, European and South American operations both posted higher profits over the prior year, led by soybean and soft seed processing in Europe, and corn and soybean origination improving in Brazil.

Finally, a mining disaster in Brazil negatively affected earnings in Cargill’s Industrial & Financial Services business. The incident, which occurred in January, forced the mine owner to cut iron ore production and exports to China.

“The incident caused iron ore futures prices in China to rise sharply,” Cargill explained, “and Capesize vessel freight rates to fall significantly. Ocean shipping rates began to strengthen by quarter end but concerns about a slowdown in global growth continued to weigh on markets.”

However, the risk management side of the segment posted a strong quarter with balanced performance across agriculture, energy, metals and other products.

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