Cargill reports quarterly profits

Nov 11, 2008
Cargill reports quarterly profits

Cargill Inc. reported a 67 percent rise in fiscal fourth quarter net income amid a divestiture as the firm sur vived “the most volatile ag ricultural and energy mar kets in decades.”

The world’s largest agri business company by sales, and one of the nation’s larg est privately held compa nies, 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 in creased demand for grain and rising demand for bio fuels 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 op erations. Income from continuing operations rose 18 percent, to $744 million.

The company did not re port 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 prod ucts, while providing finan cial services along the way. The latest quarter saw the firm’s fertilizer production soar as worldwide crop pro duction increases. Other segments, including food and agriculture, also report ed growth.

Recent months have been turbulent for Cargill, as it shuttered an Arkansas meat plant in April after a March explosion and had to tempo rarily close some Midwest plants due to June floods.

April also saw the Agricul ture Department cite a California meat plant for violations in the slaughtering of cattle.

And as higher grain pric es have sent food prices soaring, riots and protests have broken out in places where many can no longer afford staple items. Euro pean 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 agri culture the chance to catch up with demand. “If mar kets are allowed to work, today’s prices can spark a supply response from farm ers. A rekindling of public and private investment in agriculture and in rural in frastructure will drive pro ductivity gains.” — WLJ