World Grain - February 2012 - 17

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Cargill earnings drop 88% on commodity challenges
MINNEAPOLIS, MINNESOTA, U.S. — Cargill had $100 million in earnings from continuing operations in the second quarter ended Nov. 30, 2011, which marked an 88% decrease from $832 million in the previous year’s second quarter. Second-quarter consolidated revenues were $33.3 billion, up 17% from $28.5 billion in the previous year’s second quarter. “The second quarter was signiﬁcantly below expectations, especially in contrast to last year when we posted our strongest quarter ever,” said Greg Page, chairman and chief executive ofﬁcer of Cargill. “Our food ingredients and agriculture service businesses generated solid earnings. At the same time, our commodity-based trading and asset management businesses faced signiﬁcant challenges. “First, commodity and ﬁnancial markets were driven more by political uncertainties than by underlying supply and demand fundamentals. Second, our performance in the sugar market was poor. Additionally, our meat business on a combined basis experienced one of their weakest quarters. Finally, we recognized a signiﬁcant number of one-time items, including asset impairments, and acquisition and integration expenses.” The food ingredients and applications department made the largest contribution to second-quarter earnings, according to Cargill. Shrinking U.S. feed cattle supplies pressured margins in beef. Cargill’s recent acquisitions in food ingredients in Europe and Brazil and in animal protein in Central America were accretive to second-quarter earnings. Cargill in the second quarter completed the acquisition of Provimi, a leading animal nutrition company, for an enterprise value of $2 billion. Costs related to the acquisition were recorded in the agriculture services department. Weaker results in asset management, which was due to stress in global ﬁnancial markets, more than offset strong performance in risk management services to customers. For the ﬁrst six months of the ﬁscal year, Cargill had earnings from continuing operations of $336 million, which compared with $1.53 billion in the same time period of the previous year, and revenues of $67.9 billion, which compared with $54.2 billion in the same time period of the previous year. Page said Cargill is working to reduce its costs and simplify its work processes. “Cargill has been through difﬁcult cycles before, made changes and emerged stronger for it,” he said. “We are conﬁdent that the actions we are taking to create a more agile enterprise will better position us in the current economic environment.”

CHS first-quarter earnings up 106%
ST. PAUL, MINNESOTA, U.S. — CHS Inc. reported on Jan. 11 earnings of $416.2 million for the ﬁrst quarter of its 2012 ﬁscal year. Earnings attributed to CHS operations for the period (Sept. 1, 2011 through Nov. 30, 2011) increased 106% over the $201.7 million for ﬁrst quarter of ﬁscal 2011. Revenues for ﬁrst quarter of ﬁscal 2012 reached $9.7 billion, compared with $8.1 billion for the ﬁrst three months of ﬁscal 2011, primarily reﬂecting continued strong values for the energy, grain and crop nutrients products that comprise the majority of CHS business. Earnings fell within the CHS Ag Business segment due to lower margins for the grains and oilseeds the company markets and processes, as well as for those handled by its Country Operations locally controlled retail businesses. CHS’ crop nutrients business reported a quarter-over-quarter increase in earnings due to increased margins.
www.World-Grain.com / World Grain / February 2012

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World Grain - February 2012

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