Profits rose while revenues declined

Key measures include: Adjusted operating earnings rose 13% to $476 mill. in the third quarter, compared with $421 mill. in the year-ago period, a nine-month adjusted operating earnings decreased 2% to $1.66 bill. and net earnings on a U.S. GAAP basis equaled $459 mill. in the third quarter and $2.36 bill. in the first nine months. This compares with $425 mill. and $1.63 bill. in the respective periods a year ago.

The variance between adjusted and net earnings in the nine-month period included gains on the second-quarter sales of the U.S. pork business and Cargill’s interest in the North Star BlueScope Steel joint venture, and a charge related to a change in accounting treatment for Venezuela.

Third-quarter revenues decreased 11% to $25.2 bill., reflecting lower commodity prices, the strength of the U.S. dollar against other currencies, and the sale of Cargill’s pork business in the second quarter. Revenues in the first nine months totaled $80 bill.

The Food Ingredients & Applications segment was the largest contributor to adjusted operating earnings in the third quarter, with results up appreciably from a weak comparative period. The segment’s ongoing efforts to strengthen commercial and operational execution lifted earnings broadly across edible oils, malt, starches and sweeteners, and texturizers. A warm winter in North America kept road salt and deicing products below the year-ago level, but salt for food applications posted strong results.

Adjusted operating earnings in Origination & Processing increased moderately from last year, even as the segment contended with large global stocks, weak prices and low volatility in agricultural commodity markets. Within the segment, grain handling and oilseed processing in the Americas were up on a combined basis, with an additional contribution from world trading operations. While U.S. producers’ sales of corn slowed due to low prices, Argentina’s re-entry into agricultural export markets under its new administration boosted corn shipments from that country.

Adjusted operating earnings in Animal Nutrition & Protein decreased slightly in the third quarter, mostly due to conditions in the beef industry. Prior purchases of high-cost feeder cattle in North America, drought-reduced cattle supplies in Australia, decreased U.S. beef exports due to the strong U.S. dollar, and less expensive pork and poultry choices at retail all worked to hold results below the prior year. Earnings rose in animal nutrition, led by operations in the U.S. and Vietnam. Additional strong performance in U.S. turkey and value-added proteins boosted segment earnings close to the year-ago level.

Market conditions weighed on adjusted operating results in Industrial & Financial Services, with the segment recording a quarterly loss. Excess shipping capacity sent ocean freight rates to historic lows. Crude oil markets were oversupplied relative to demand, curbing results in petroleum. The slowdown in steel demand had the same effect on the metals supply chain. The segment turned a profit in natural gas and power in North America even as a warm winter and high industry production levels boosted gas storage and kept prices low.

Cargill subsidiary Black River Asset Management completed the spinout of its core businesses into three independent, employee-owned asset management firms. Cargill is in the process of closing Black River.