international producer and marketer of food products and services Cargill has reported $1.17 billion in earnings from continuing operations in the 2012 fiscal year ended May 31, 2012, a 56% decrease from a record $2.69 billion in the prior year. Fourth-quarter earnings were $73 million, down 82% from $404 million in the same period a year ago.
Consolidated revenues in fiscal 2012 were $133.9 billion, up 12% from $119.5 billion in the prior year. Fourth-quarter revenues were $34 billion, a 2% decrease from a year ago.
Among the five business segments, Cargill’s food ingredients and applications segment was the largest contributor to company results in both the fourth quarter and full year. The segment is comprised of two groups of businesses: food ingredients and animal protein.
Record earnings for ingredients
Fourth-quarter food ingredients earnings were somewhat lower than last year’s level, but the group posted record earnings for the full year, with performance particularly strong in sweeteners, starches, specialty oils and cocoa worldwide, and in staple foods in several emerging markets.
“Cargill’s earnings performance was not up to our expectations, though with notable exceptions,” said Greg Page, Cargill chairman and chief executive officer. “Our 26-unit food ingredients group delivered a third consecutive year of record earnings.”
“One-third of our businesses exceeded last year’s results, and nine achieved record profits. We invested more than $4 billion globally in acquisitions, new and expanded facilities, and capital improvements that support both our customers’ and our company’s growth.”
"We did not trade as well"
Page said two factors accounted for much of the change in company results. “Cargill’s global market analysis of supply and demand, and our trading expertise are long-standing strengths. Even so, we did not trade as well in this year’s markets, which were driven as much by the economic and political environment as by the fundamentals.”
“Cyclical trends in the global soybean processing and North American beef industries also were in play, decreasing margins in parts of Cargill’s oilseed processing and beef processing operations.”
During the year, Cargill began realigning the company’s cost structure and simplifying its work processes. Expenses were cut by more than $400 million. Resources were focused on the activities that added the most value for customers.
Significant additions during the year were Cargill’s purchase of Central American poultry and meat processor Corporación Pipasa, and German cocoa and chocolate company KVB. The company formed three joint ventures – in beef in Australia; in sugar, ethanol and bioelectricity in Brazil; and in biopolymers in Thailand and the United States.
It opened innovation centres in Brazil’s São Paulo state and in Wichita, Kan. Among its greenfield investments, Cargill began building an integrated poultry business in China’s Anhui province and a corn processing complex in Brazil’s state of Paraná.
In looking ahead, Page said, “We are confident about Cargill’s ability to grow profitably, to help our customers to do the same, and to help build a more food-secure world.”