At $471,611 an hour, Cargill posts fine quarter
The company broke the $1 billion mark on profit amid global food
shortages and growing energy demands.
By MATT McKINNEY, Star Tribune
Last update: April 14, 2008 - 9:01 PM
Has it ever been better for Cargill? Not likely.
The company turned in yet another set of dazzling results on Monday,
with quarterly earnings leaping 86 percent to break the $1 billion
barrier for the first time.
Profit for the quarter ended Feb. 29 was $1.03 billion, a pace that
earned the company $11.3 million a day. That's $471,611 an hour, for
anyone who's keeping track.
The surge of profitmaking comes as global food shortages and an
expanding biofuels industry has put a premium on agricultural
commodities and technology -- the mainstays of Cargill's business.
Cargill CEO Greg Page noted the "striking" dimensions of today's
global agriculture business in a Monday release accompanying the
privately held company's limited financial statements.
"Demand for food in developing economies and for energy worldwide is
boosting demand for agricultural goods, at the same time that
investment monies have streamed into commodity markets," the note
read.
"Relative to demand, world grain stocks today are at their lowest
levels in 35 years. Prices are setting new highs and markets are
extraordinarily volatile. In this environment, Cargill's team has done
an exceptional job measuring and *****sing price risk, and managing
the large volume of grains, oilseeds and other commodities moving
through our supply chains for customers globally," the note
continued.
Cargill first broke the $1 billion annual earnings mark in 2003 with
$1.29 billion in profits. Through the first nine months of the
company's fiscal year, it has earned $2.9 billion, a 69 percent
increase over the year-ago period.
"The results today are not the result of anything the company did in
three months, six months or a year," said company spokeswoman Lisa
Clemens, "but the ***ulative effect of having invested for many years
in expanding our facilities, developing new capabilities and hooking
up our knowledge around the world."
The emergence of a middle class in developing nations like China and
India has bolstered company profits, with Cargill riding a wave of
unprecedented demand for meat and eggs from consumers across Asia and
elsewhere.
And yet, in the poorest places in the world, sharply rising food
prices have incited riots from Haiti to the Philippines, Cameroon to
Indonesia.
Armed guards now stand watch over some Thai rice paddies. Cambodia's
prime minister has ordered a limit on ex****ts of rice out of the
country to maintain domestic supplies.
The shortages have strengthened Cargill's call for free trade, Clemens
said.
"Particularly at a time when grain stocks are at their lowest levels
in 35 years, Cargill believes it's very im****tant that food be allowed
to move from places where there is a surplus to places where there is
a need," she said.
The company said its best performance in the most recent quarter came
from its origination and processing segment, which essentially buys
and moves food around the world.
Four of the company's five segments re****ted higher earnings this
quarter than a year ago, with only its risk management and financial
segment re****ting lower earnings.
That was a concern for DBRS, a privately owned rating agency
headquartered in Toronto, which gave the company an A (high) rating,
its fourth highest rating, with a negative trend due to ongoing
uncertainty in the credit and mortgage markets.
"Three of four cylinders are clicking very strongly and one cylinder
is a concern," said Anil Passi, senior vice president at DBRS.
Cargill's investments in the third quarter included a $140 million
conversion of an im****ted corn plant in Manchester, U.K., to domestic
wheat, opening new oilseed facilities in Argentina, Australia, Russia,
China and the United States, construction of a second malt plant in
Argentina, opening a fifth feedmill in Vietnam and acquiring a U.K.
chicken processing business, Freemans of Newent.
The company has $1.3 billion in projects under construction, according
to Clemens.
Matt McKinney * 612-673-7329
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