MINNEAPOLIS, Sept. 27, 2018 /PRNewswire/ -- Cargill today reported results for the first quarter of fiscal 2019, which ended Aug. 31, 2018. Key measures include:
- Adjusted operating earnings totaled $883 million, nearly matching the $888 million earned in last year's strong comparative period.
- Net earnings on a U.S. GAAP basis were $1.02 billion, up 5 percent from $973 million in the prior-year period.
- Revenues rose 5 percent to $28.7 billion.
"Our customers are choosing Cargill more and more often because we provide them the confidence they need to win in a fast-changing world," said David MacLennan, Cargill's chairman and chief executive officer. "We give them an edge by connecting them to our team's expertise, unique capabilities and global network. Whether it's sustainably sourced foods and feeds, digitally driven insights, or supply chain risk management, we will continue innovating to provide an integrated set of solutions that meet their needs."
Adjusted operating earnings in Animal Nutrition & Protein were just below last year's strong opening quarter, lifted by another good performance in North American protein. Domestic and international demand for beef remained strong, as did foodservice demand for value-added egg products. In contrast, the U.S. turkey meat market continued to be weighed down by excess supply relative to demand. Despite improved performance in China and Europe, a mix of challenges in Central America and Southeast Asia reduced results in the segment's global poultry business. Earnings in animal nutrition lagged the prior year due to varying combinations of higher input costs, lower sales volumes and pricing pressures in different countries. This was partially offset by gains in Latin America for micronutrients, premixes and feed additives.
Food Ingredients & Applications delivered slightly lower earnings against a strong comparative period. The segment posted gains in cocoa, chocolate, edible oils and malt, while earnings in starches, sweeteners and texturizers were affected by lower ethanol prices and trading results in North America and currency devaluations in emerging markets. The segment's salt business fell below last year's level due to higher road salt production costs and freight rates. The segment formed a new bioindustrial group focused on meeting the growing demand for sustainably made and sourced products serving the consumer and industrial segments.
Origination & Processing earnings were up appreciably from a weak comparative period. Global demand was strong and markets volatile, as weather events in key crop-growing regions and rising economic uncertainty brought the segment's sourcing, trading, analytical and logistical skills to the fore. Regionally, Asia Pacific improved performance with good trading and oilseed processing results, while North America and Europe realized solid oilseed processing results in canola, soybeans and biodiesel.
Industrial & Financial Services trailed the prior year due to lower returns from Cargill's asset management activities. The decrease was partially offset by good performance in trade finance and commodity risk management, where teams helped customers steer through the volatility that returned to global commodities markets. The ocean transportation business demonstrated leadership in decarbonizing the shipping industry by committing to reduce its carbon dioxide output per cargo-ton-mile by 15 percent by the end of 2020. To help achieve this goal, it launched a "CO2 Challenge" that will seek to uncover and scale new technologies to lower ships' emissions. Entrepreneurs and technologists will be selected to participate in this project in the coming months.
Partnerships to help women farmers prosper
Women play a vital role in agriculture around the world, and their prosperity is an essential component of ensuring a strong, sustainable food system. During the quarter, Cargill launched a $2 million, two-year partnership with the ONE Campaign to advocate for policies that support education, inclusive financing, property rights and market access for women in agriculture. Joining with ONE's global network of 9 million activists, Cargill and its employees will amplify public awareness of gender issues and share stories of women who have overcome challenges. Using the hashtag #PovertyIsSexist, the two organizations will seek to inspire and mobilize broad-based action.
Cargill also is committed to continuing to strengthen women farmers' prosperity as they grow their farming operations. To this end, the company announced a project with the China Women's Development Foundation to improve productivity and boost incomes for women running small- and medium-sized hog farms in the southwestern part of the country. The program will equip 300 farming households in the first year with best practices in animal husbandry, biosecurity, farm management and more. Cargill also is establishing a dozen demonstration farms as a resource to these producers. The China Women's Development Foundation has been recognized by the Chinese government with its top honor for charitable organizations.
"Women are at the heart of farming communities everywhere. When they have an opportunity to earn an income, that whole community thrives," MacLennan said. "We are proud to work alongside our partners to advance women's prosperity, which in turn will propel social and economic development."
* This earnings release is published prior to the issuance of Cargill's quarterly financial statements.
Explanation of non-GAAP financial measure
Cargill reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company additionally reports adjusted operating earnings, a non-GAAP financial measure that management believes provides additional insight into the underlying financial performance of ongoing operations. In calculating adjusted operating earnings, Cargill includes earnings and losses attributable to non-controlling interests in consolidated companies, with the exception of those from its asset management business. Mark-to-market gains and losses on intercompany contracts between the Origination & Processing and the Food Ingredients & Applications segments also are included. Cargill excludes the following six items: timing differences related to inventory, derivatives and hedging; last-in, first-out (LIFO) inventory adjustments; amortization of intangible assets; gains and losses on changes in investment structures; asset impairment and restructuring charges; and gains and losses on disposals of businesses and other long-term assets. For more information, visit www.cargill.com/company/financial/index.jsp.
Cargill's 155,000 employees across 70 countries work relentlessly to achieve our purpose of nourishing the world in a safe, responsible and sustainable way. Every day, we connect farmers with markets, customers with ingredients, and people and animals with the food they need to thrive. We combine 153 years of experience with new technologies and insights to serve as a trusted partner for food, agriculture, financial and industrial customers in more than 125 countries. Side by side, we are building a stronger, sustainable future for agriculture. For more information, visit Cargill.com and our News Center.