Cargill’s profit dropped 6% in the second fiscal quarter, as its corn and soybean division weakened the company financially.
Its animal nutrition and protein division was the “largest contributor” to profit in the second quarter, saving the business from an even greater dip in profit.
Beef continued to enjoy brisk demand in the US, and exports continued to perform strongly in most global markets too.
Whole bird sales were strong as well, thanks to the Thanksgiving holiday in November driving demand for turkey. But globally, Cargill’s poultry earnings dropped year-on-year. The “good performance” in south-east Asia, which saw the opening of the Philippines’ biggest-ever chicken plant, was hit by weaker earnings elsewhere.
Cargill results at a glance
- Adjusted operating earnings fall 8% to US$948m
- Profit drops 6% to US$924m
- More than $1bn spent on agreed M&A and investment activity
Company-wide, Cargill wants to become a more integrated company and has been active in mergers and acquisition space in recent years. Across all divisions, the business announced more than $1bn of M&A and investment in the second quarter, keeping this long-term strategy on track.
In December 2017, it acquired Iowa-based Diamond V, which manufactures specialised microbial fermentation products used in animal feed. Cargill said the takeover should “complement” its equity partnership with an Austrian natural feed producer called Delacon. Cargill also acquired animal nutrition firms in Brazil and South Africa, positioning itself in countries where animal protein production is on the up.
In the UK, it entered into a joint venture with major UK poultry business Faccenda Foods – a company that, like Cargill, is privately owned and does not face pressure from shareholders.
“Even as conditions vary across our global markets, we continue to realise greater benefits from operating as an integrated company with a unique combination of talent, assets, insights and solutions,” said David MacLennan, Cargill’s CEO in a note in the Q2 results.
“Thanks to the results of our recent strong performance, we are reinvesting in ways that enable our teams to achieve more for our customers and lead to growth.”