Cargill reported adjusted operating earnings were up 3% to $908 million for the fiscal 2020 first quarter ended Aug. 31, 2019. First quarter revenue rose 1% to $29 billion.
“Our year started on a good note as we continued to help our customers navigate an unpredictable business environment,” said Dave MacLennan, Cargill’s chairman and chief executive officer.
Adjusted operating earnings rose in two of Cargill’s four business segments: Animal Nutrition & Protein, and Industrial & Financial Services. They decreased in Origination & Processing and Food Ingredients & Applications. Notable results include:
- Global protein led the way, with strong results in North America. Protein in Europe and Asia climbed due to good poultry performance in China, Thailand and the U.K. Similarly, protein in Latin America improved.
- Despite pressure from African swine fever, results improved in global compound feeds. Aqua feeds also captured healthy results amid aquaculture’s high season.
- Starches, sweeteners and texturizers dropped primarily due to lower volumes in Europe and North America. Performance in cocoa and chocolate reflected a softening cocoa market in several regions and higher operating costs in chocolate in North America.
- Results declined for the company’s origination and processing businesses in most geographies, as trade- and weather-related disruptions continued to take a toll.
- The global trading business saw good year-on-year improvement, as it was well-positioned across commodities.
- Trade finance results were held back by fiscal deterioration in Argentina late in the quarter. In risk management, low prices and low volatility in agricultural markets decreased demand for hedging solutions.
During the quarter, Cargill expanded a joint venture and formed new partnerships:
- The company invested an additional $75 million in Puris, the largest manufacturer of pea protein in North America. This will help the firm more than double production by repurposing an existing facility in Minnesota to supply plant-based proteins, starches and fibers to food and beverage customers.
- Cargill formed a commercial partnership with InnovaFeed, a leader in producing protein for feed from insects, to jointly market these feeds as it seeks to support the growth of sustainable aquaculture worldwide. Similarly, an agreement with biotech company White Dog Labs provides Cargill with access to a fermentation-based protein for use in salmon feeds.
Cargill is teaming up with partners to advance the environmental, social and economic sustainability of food and agriculture. Examples include:
- The company announced the BeefUp Sustainability program, which by 2030 will reduce greenhouse gas intensity by 30% across its beef supply chain per pound of product by focusing on grazing management, feed production, innovation and food waste reduction. Achieving the target will be the equivalent of removing 2 million cars from U.S. highways for a year.
- With partner Heifer International, Cargill and customer Distribuidora El Tio expanded the Hatching Hope Global Initiative to Mexico. Launched earlier this year, Hatching Hope will provide resources, know-how and market access to smallholder women farmers so they can sustainably increase poultry production and improve the lives of 100 million people by 2030.
- Cargill, Techstars and Ecolab debuted the second cohort of their Farm to Fork Accelerator. Hailing from across the U.S., as well as Canada, Israel and India, startups in the cohort are focused on advancing key aspects of the food system, including food security and safety, ag tech, consumer goods and supply chain management.
- The University of Illinois at Urbana-Champaign’s Research Park will house Cargill’s newest Innovation Lab, where a team of data scientists and lab students will work directly with Cargill business leaders, operations teams and customers to find digital solutions to food and agriculture challenges.
“There is no one solution to creating resilient food systems. We are using the reach of our global businesses – as well as the expertise of our own teams and our partners – to find the many answers we’ll need to nourish the world in a sustainable way,” MacLennan said.