Amid layoffs, Cargill’s owners given $2B in stock buybacks and special dividends

As Cargill started laying off thousands of employees last month, the company’s owners made $2 billion from stock buybacks and one-time dividends, according to Fitch Ratings.

The Minnetonka-based agribusiness announced in December it would lay off 5% of its global workforce, or about 8,000 people, as part of a broader restructuring to counter declining profits. About 475 headquarters jobs were eliminated in Minnesota.

At the same time, the private company’s owners — almost entirely members of the billionaire Cargill-MacMillan family — received $500 million from a “special” dividend and a rare $1.5 billion share repurchase completed in December, according to a Fitch Ratings report issued this week. The company last offered a share buyback and special dividend in 2019.

The profit-sharing came even as Cargill’s profits dropped 36% to $2.5 billion in its most recent fiscal year and a majority of the company’s business units missed profit targets, according to Bloomberg.

The company has “abundant liquidity” with $6.8 billion in cash and short-term investments, Fitch reported.

Share buybacks are a common way for companies to reward shareholders by both returning cash to them and raising the value of the remaining stock outstanding. Dividends are one of the only ways some Cargill-MacMillan heirs make money from their ownership stake in the nation’s largest privately held company.

Cargill’s normal annual dividends have averaged $1 billion over the past several years, according to Bloomberg.

Cargill officials declined to comment.

Like many ag companies, Cargill is facing tighter profit margins due to low crop prices, after hauling in record earnings during the pandemic. Fitch sees more challenges ahead, with “expanding commodity supplies, renewable diesel regulatory uncertainties, inflation, weaker global trade flow, weak U.S. beef fundamentals and tariff risks.”

The company’s earnings before interest, taxes, depreciation and amortization is expected to be unchanged from last year at around $7 billion, the credit-rating agency estimates.

Cargill launched a restructuring last year as part of a plan to be “the world’s most consequential food and agriculture company” by the end of the decade, CEO Brian Sikes told employees.

Beyond reducing its core business units from five to three, the company has pulled back some of its global presence over the past year, ending 40 years of tea buying in Kenya and decades of steel trading in China.

Fitch sees a sunnier long-term outlook for Cargill, as “solid demand for food, fuel and feed and a relatively balanced but expanding commodity supply environment will support longer-term healthy profit generation.” The company’s 2026 profit should be boosted in part by “efficiency initiatives.”