African swine fever in China, a wet spring in Middle America and the U.S.-China trade war torpedoed Cargill Inc.'s net profit 67% lower for the March-through-May quarter.
Minnetonka-based Cargill is the largest grain trader and one of the largest meat processors in the world. It does best when global markets are stable and free-trade policies reign. International trade restrictions and a number of uncontrollable natural forces hurt Cargill's bottom line in its fiscal fourth quarter and full-year, ended May 31.
The privately held company released the brief earnings report Thursday. It said it earned $235 million, down from $711 million a year ago. Revenue fell 1% to $29.9 billion.
"Throughout the year, we faced a very challenging global business environment that slowed earnings," said Dave MacLennan, Cargill's chief executive. "Still, we improved performance in several food and financial businesses and significantly reduced costs companywide."
Cargill's protein business — which includes sales of beef, poultry, eggs and animal feed — was once again the company's biggest contributor to its income last quarter. North American protein sales were slightly off from last year in part due to spring flooding across Nebraska and parts of the Midwest that delayed cattle shipments.
Cooler weather also delayed outdoor grilling season, cutting into its meat sales. But Cargill signaled optimism about that business, noting strong demand for beef both domestically and for export.
Cargill customers — which include large restaurants and food vendors such as McDonald's and many more — showed strong demand for value-added egg products, which is industry parlance for pre-made egg products packaged and sold beyond the raw, in-shell form. The consumer trend toward protein-rich breakfasts, including the growing preference for eggs over cereal, is driving this demand.
The company's animal-feed earnings were negatively affected by the culling of millions of pigs in China and nearby countries as they try to control the spread of African swine fever. The disease and efforts to fight it are estimated to have killed more than 40% of China's hog population. China produces half the world's pork. With significantly fewer animals to feed, the country doesn't need to buy as much animal feed.