Cargill saw its net earnings drop by 20% in its second quarter, partly due to lower hog volumes in China and challenges in the US dairy and poultry industries.
The Minnesota-headquartered company recorded net earnings of $741 million for the three months ended 30 November 2018.
Second-quarter revenues decreased 4% to $28 billion as the company cited political instability in Central America and market challenges in Southeast Asia which affected its global poultry business.
The firm’s animal nutrition and protein unit was the largest contributor to earnings. Sales volumes for salmon and shrimp feeds in the North Sea region and Mexico were up, but animal nutrition earnings trailed the prior year due to “adverse market conditions in several regions”.
In its food ingredients and applications division, Cargill said starches and sweeteners earnings decreased on “historically low ethanol prices in North America and higher energy and raw material costs in Europe”. Lower sales volume and higher operating costs in North America trimmed otherwise positive cocoa and chocolate performance in other regions.
Cargill’s origination and processing business saw earnings rise as oilseed processing remained strong in North America and Europe, bolstered by growing protein consumption that drove global demand for soybean meal for livestock feeds.
Dave MacLennan, Cargill CEO, said: “Our teams executed in a world of uncertainty to bring the best solutions to our customers and the consumers they serve. Now, we are pushing to ready our businesses for the future with continuous improvement, financial discipline and a disruptive mindset.”
During the quarter, Cargill carried out a raft of investments and acquisitions, In Colombia it acquired chicken producer Campollo, complementing the purchase of Colombia-based Pollos El Bucanero last fiscal year as it aims to serve growing protein demand in emerging markets.
Cargill announced two new projects to further digitalise the agricultural supply chain. With Archer Daniels Midland (ADM), it agreed to form Grainbridge, a technology joint venture that intends to provide support to North American farmers on grain marketing decisions, e-commerce and account management software.
Meanwhile, it also announced a collaboration with ADM, Bunge and Louis Dreyfus to investigate ways to standardise and digitalise global agricultural shipping transactions.