MINNEAPOLIS, Oct. 7, 2015 /PRNewswire/ -- Cargill today reported financial results for the fiscal 2016 first quarter ended Aug. 31, 2015. Key measures include:
- Adjusted operating earnings in the first quarter were $611 million, compared with $619 million in the same period a year ago.
- Net earnings were $512 million, a 20 percent increase from last year's $425 million.
- Revenues were $27.5 billion, down 17 percent from $33.3 billion a year ago.
"Cargill posted a productive start to the new fiscal year, led by solid performance globally in grain and oilseeds processing and animal nutrition," said David MacLennan, Cargill's chairman and chief executive officer. "Our team ably navigated the quarter's weather-driven agricultural commodity markets, as well as the effects of more volatile emerging markets, currency fluctuations and other macroeconomic uncertainty. Across the company, we made good headway on operational improvements aimed at strengthening business performance. The integration of ADM's chocolate business is proceeding on target, and we are excited to welcome EWOS, a global leader in salmon nutrition, to our company."
The Origination & Processing segment made the largest contribution to Cargill's first quarter, with adjusted operating earnings up slightly from a year ago. Within the platform, combined results for the grain and oilseed supply chain businesses rose considerably, based on effective positioning in agricultural commodity markets distinguished by persistent downward trends and occasional sharp price reversals. Soybean crush results strengthened globally, boosted by improved capacity utilization in South America and an unusually long processing season in North America. Performance in North American farm services lagged last year's strong first quarter, reflecting a return to more normalized levels in Canada after two very large crop years.
Adjusted operating earnings in Animal Nutrition & Protein decreased in the first quarter, with increased results in animal nutrition offset by lower earnings in animal protein. Global animal nutrition earnings exceeded last year's solid start due to higher sales volumes of customer-aligned products and services, and good cost management. Areas of particular strength included the U.S. and Vietnam, and aquaculture nutrition in Latin America. Within the segment's animal protein businesses, poultry results in Central America, Europe and the U.S. rose on strong operational and marketing performance. Unseasonable pressures in cattle and beef markets led to a weaker quarter in North American beef. Cattle costs remained high, and continued high beef prices caused consumers to seek less expensive alternatives such as pork and poultry.
Results in Food Ingredients & Applications were down slightly from last year's first quarter, though efforts to reduce costs and improve performance showed good progress across the segment. Profitability in starches and sweeteners was pressured in Europe by historically low sugar prices, and in North America by the impact of low crude oil prices on markets for corn-based ethanol. Other ingredients within the segment's portfolio also saw slippage in earnings, as did staple foods in some emerging markets. In contrast, salt results rose on new volume from last year's purchase of a salt facility in Michigan and lower freight costs. The acquisition of ADM's chocolate business was completed in late July and integration is proceeding smoothly.
Industrial & Financial Services' adjusted operating earnings declined as hedge fund closures at a Cargill-owned asset management subsidiary overshadowed a good start in the industrial units. The energy businesses posted a solid first-quarter profit due to effective trading strategies in more volatile, downward trending markets. Metals and ocean transportation also posted better results in challenging markets.
Explanation of non-GAAP financial measure
Cargill reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). Effective in the fiscal 2016 first quarter, the company also reports adjusted operating earnings, a non-GAAP financial measure that management believes provides additional insight into the underlying financial performance of the company's ongoing operations. In calculating adjusted operating earnings, Cargill excludes the following items: timing differences related to inventory, derivatives and hedging; last-in-first-out (LIFO) inventory adjustments; amortization of intangible assets; gains and losses on changes in investment structure; asset impairment and restructuring charges; and gains and losses on sales of businesses and other long-term assets. For more information, visit www.cargill.com/company/financial/index.jsp.
Cargill provides food, agriculture, financial and industrial products and services to the world. Together with farmers, customers, governments and communities, we help people thrive by applying our insights and 150 years of experience. We have 155,000 employees in 68 countries who are committed to feeding the world in a responsible way, reducing environmental impact and improving the communities where we live and work. For more information, visit Cargill.com and our News Center.
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