Cargil reports quarterly profits

Cattle Market & Farm Reports, Editorials
Aug 22, 2008
by WLJ

Cargil reports quarterly profits

Cargill Inc. reported a 67 percent rise in fiscal fourth-quarter net income amid a divestiture as the firm survived "the most volatile agricultural and energy markets in decades."

The world’s largest agribusiness company by sales, and one of the nation’s largest privately held companies, said high demand for crops has led to growth in multiple segments.

A portion of the increase also comes from the firm’s grain business, an industry that has been reaping huge profits in recent months as the prices of corn, wheat and soybeans have all soared on the back of increased demand for grain and rising demand for biofuels made from food crops. But the soaring profits have not come without criticism, as many say a worldwide food crisis looms thanks to rapidly inflating prices and depleting stocks.

Worldwide grain stocks sit at a 35-year low, Cargill said, blaming weather and low yields for the soaring prices. But it added the market should be allowed to fix itself.

Meanwhile, the company reported net income for the quarter ended May 31 of $1.05 billion, compared to $628 million a year earlier. The latest quarter was boosted by a $310 million gain from selling some operations.

Income from continuing operations rose 18 percent, to $744 million.

The company did not report revenue for the quarter. Revenues for the full year, however, rose 36 percent, to $120.4 billion.

Cargill’s wide range of businesses have a hand in almost every stage of food production, from farm feed to meat and poultry products, while providing financial services along the way. The latest quarter saw the firm’s fertilizer production soar as worldwide crop production increases. Other segments, including food and agriculture, also reported growth.

Recent months have been turbulent for Cargill, as it shuttered an Arkansas meat plant in April after a March explosion and had to temporarily close some Midwest plants due to June floods. April also saw the Agriculture Department cite a California meat plant for violations in the slaughtering of cattle.

And as higher grain prices have sent food prices soaring, riots and protests have broken out in places where many can no longer afford staple items. European antitrust enforcers have begun investigating the inflation, leading to a review of the Italian offices of Cargill in July. Cargill says it is cooperating fully with any investigations.

Cargill Chairman and Chief Executive Greg Page said last Tuesday the world has the means to give agriculture the chance to catch up with demand. "If markets are allowed to work, today’s prices can spark a supply response from farmers. A rekindling of public and private investment in agriculture and in rural infrastructure will drive productivity gains." — WLJ

{rating_box}