Cargill sees 61% increase in Q2 profits after shifting business to offset disruptions

While Cargill Inc. continues to grapple with ongoing trade uncertainties that are hitting its North American growers particularly hard, the company is large enough that it has been able to adjust its global commodities to minimize the impact to its bottom line.

The Minnetonka-based company's size and geographic reach, along with the sale of two of its businesses, resulted in a plump profit of $1.19 billion, a rise of 61% from a year ago, for Cargill's fiscal 2020 second quarter, ended Nov. 30.

Cargill is the largest private company in America and isn't required to disclose detailed financial information.

The company divested its malt business and financial subsidiary CarVal Investors this fall, making a significant contribution to its net earnings. Meanwhile, Cargill is growing its investment in animal nutrition with the long-term vision of finding natural alternatives to antibiotic use and medical interventions through dietary technologies.

"We saw very good execution from our global teams throughout the quarter, as they focused on delivering what matters for our customers," Dave MacLennan, Cargill's chief executive, said in a release Tuesday morning. "Our ongoing transformation, as well as recent acquisitions and expanded capabilities, are all helping us continue to raise our performance."

As one of the world's largest agribusinesses, Cargill was able to shift its global protein flows on a by-country basis to respond to changing demands for various meats caused by the African swine fever outbreak that has devastated China's hog population.

Similarly, as North American farmers have dealt with a slowdown in their grain exports in the face of trade turmoil, Cargill's far-reaching presence gives the commodity trader flexibility to shift its supply-demand flows to other regions. Still, the company's grain trading business, along with its food-ingredients business, suffered declines during the quarter.

Its animal nutrition and protein business continued its steady and successful march, increasing quarterly earnings. The fourth reporting segment, industrial and financial services, also grew during the quarter in part due to the company's ocean shipping business. On Jan. 1, new global standards for lower-sulfur fuels went into effect. Cargill said it took two years to prepare its 600 leased vessels for this change and "is in a strong position" to provide charter service to others as a result.

Weather is always a factor in Cargill's earnings and this quarter was no different. Several early winter storms in North America boosted sales in its road salts business.

Overall revenue rose 4% to $29.2 billion for the second quarter while adjusted operating earnings were up 19% to $1.02 billion.

Kristen Leigh Painter • 612-673-4767