Cargill reported this week results for its fiscal 2020 first quarter ended Aug. 31, 2019. Adjusted operating earnings were $908 million, up 3% from $883 million during the same period last year. Net earnings on a U.S. generally accepted accounting practices (GAAP) basis were $915 million, a 10% decrease from $1.02 billion in last year’s strong comparative period, the company reported.
“Our year started on a good note as we continued to help our customers navigate an unpredictable business environment,” Cargill chairman and chief executive officer Dave MacLennan said. “Right now, we are focused on modernizing all aspects of our operations so we can effectively and efficiently provide our customers with solutions they value everywhere they do business.”
Results showed that adjusted operating earnings rose in both the company’s Animal Nutrition & Protein and Industrial & Financial Services segments but decreased in Origination & Processing and Food Ingredients & Applications.
Cargill said global protein led the way, with strong results in North America as the business brought innovative solutions to help customers meet strong consumer demand for beef and eggs. Protein in Europe and Asia climbed due to good poultry performance in China, Thailand and the U.K. Similarly, protein in Latin America improved even with a difficult operating environment.
Despite pressure from African swine fever, the company said results improved in global compound feeds as the business combined an advantageous product mix with effective cost management. Aquaculture feeds also captured healthy results amid aquaculture’s high season, Cargill said.
During the first quarter, results for starches, sweeteners and texturizers dropped primarily due to lower volumes in Europe and North America.
“Performance in cocoa and chocolate reflected a softening cocoa market in several regions and higher operating costs in chocolate in North America,” company reported.
Results declined for the company’s Origination & Processing businesses in most geographies as trade- and weather-related disruptions continued to take a toll.
The global trading business saw good year-over-year improvement, as it was well positioned across commodities. The Asia-based metals business also used sound market reads and execution to make gains over the prior year.
Cargill reported that trade finance results were held back by fiscal deterioration in Argentina late in the quarter. In risk management, low prices and low volatility in agricultural markets decreased demand for hedging solutions.
New pathways to growth
During the quarter, Cargill said it expanded a joint venture and formed new partnerships.
The company invested an additional $75 million in Puris, the largest manufacturer of pea protein in North America. “This will help the firm more than double production by repurposing an existing facility in Minnesota to supply plant-based proteins, starches and fibers to food and beverage customers,” Cargill said.
In addition, Cargill formed a commercial partnership with InnovaFeed -- a leader in producing protein for feed from insects -- to jointly market these feeds as it seeks to support the growth of sustainable aquaculture worldwide. Similarly, an agreement with biotech company White Dog Labs is providing Cargill with access to a fermentation-based protein for use in salmon feeds.
Changing what’s possible sustainably
Across its global businesses, Cargill is teaming up with a unique network of partners to advance the environmental, social and economic sustainability of food and agriculture.
For example, the company announced the BeefUp Sustainability program, which will reduce greenhouse gas intensity 30% by 2030 across its beef supply chain per pound of product by focusing on grazing management, feed production, innovation and food waste reduction. Achieving the target will be the equivalent of removing 2 million cars from U.S. highways for a year.
With partner Heifer International, Cargill and customer Distribuidora El Tio expanded the Hatching Hope Global Initiative to Mexico. Launched earlier this year, Hatching Hope will provide resources, know-how and market access to female smallholder farmers so they can sustainably increase poultry production and improve the lives of 100 million people by 2030.
To nurture breakthrough innovations, Cargill, Techstars and Ecolab debuted the second cohort of their Farm to Fork Accelerator. Hailing from across the U.S. as well as Canada, Israel and India, start-ups in the cohort are focused on advancing key aspects of the food system, including food security and safety, agricultural technology, consumer goods and supply chain management.
The University of Illinois at Urbana-Champaign’s Research Park will house Cargill’s newest Innovation Lab, where a team of data scientists and lab students will work directly with Cargill business leaders, operations teams and customers to find digital solutions to food and agriculture challenges.
“There is no one solution to creating resilient food systems. We are using the reach of our global businesses – as well as the expertise of our own teams and our partners – to find the many answers we’ll need to nourish the world in a sustainable way,” MacLennan said.