By Jacob Bunge
Cargill Inc.'s quarterly earnings jumped 33% as booming meat
profits and low grain prices boosted results at the agricultural
conglomerate.
Improved earnings from energy trading and road salt helped
Cargill overcome currency shifts that pinched profits in its
food-ingredient divisions, the company said Thursday.
"Cargill's results were led by strong performance in our global
group of meat and animal nutrition businesses," said Cargill Chief
Executive David MacLennan.
Profits in the third quarter ended Feb. 28 rose to $425 million,
even as revenue slipped 11% to $28.4 billion.
It marked the second straight quarter of larger profits for
Cargill--among the world's largest privately held companies--after
three straight quarterly earnings declines. Those drops included
last year's third quarter, when a power-trading loss spurred the
company to overhaul risk-management practices and its
energy-trading operations.
The suburban Minneapolis-based company, which processes beef,
pork and turkey in the U.S. and chicken in Latin America and Asia,
is the latest major meatpacker to report rising profits as growing
consumer demand and bountiful grain for feed have made the meat
business more lucrative. Besides raising and slaughtering animals,
Cargill also is a major producer of animal feed, a unit that
reported rising sales volumes over the quarter.
Rising earnings in Cargill's meat business came as the company
slimmed down some U.S. operations, selling a Texas cattle feedlot
and shuttering a Missouri turkey processing plant over the
quarter.
Quarterly profits at rival meat firms Tyson Foods Inc. and
Pilgrim's Pride Corp. topped analysts' expectations in recent
months as margins on chicken remain robust and U.S. pork supplies
rebounded from a virus that killed millions of young pigs over the
past two years.
Meatpackers have also benefited from back-to-back bumper
harvests of U.S. corn and soybeans over the past two years, which
have slashed the cost of producing feed and raising livestock.
Record crops also lifted Cargill's core grain-trading division, the
company said Thursday, alongside strong export demand and improved
U.S. logistics after railroad snarls badly hampered grain shipping
in the winter of 2014.
Sales of road salt jumped over the same quarter a year ago as
cities stocked up on deicing supplies following last year's harsh
winter. Cargill said its energy-trading division "successfully
navigated" volatile crude-oil markets and rebounded from last
year's power-trading loss, though struggles in its asset management
unit weighed on its overall earnings from financial services.
The U.S. dollar's rise against the euro and Brazil's real
crimped profits in the company's food-ingredients division, with
earnings translated back to U.S. dollars at lower rates. Currency
shifts in Venezuela also prompted Cargill to revalue some food and
salt businesses in that country and book a charge against those
divisions' earnings.
Angela Chen contributed to this article
Write to Jacob Bunge at jacob.bunge@wsj.com
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