Cutting costs helped Cargill Inc. show a 14% jump in its fiscal third quarter, even as global threats such as trade, low ethanol demand and swine fever pulled down the company’s profits.
Net earnings on a U.S. GAAP basis for the quarter were $566 million, a 14% increase from $495 million in the same period last year. For the nine-month timeframe ending Feb. 28, 2019, net earnings declined 3% to $2.33 billion.
Third-quarter revenues decreased 4% to $26.9 billion, bringing the year-to-date figure to $83.5 billion.
Cargill, the largest privately-held company in the U.S., reported a slump in revenue for all four of its business units.
Within the segment, earnings in North American protein exceeded the same period last year, boosted by continued strong domestic and export demand for beef as well as consumer demand for egg products.
African swine fever in China and other countries and unfavorable dairy eco in the U.S. were the largest factors to lower animal nutrition revenues. China, typically the top buyer of U.S. soybeans did purchase commodities during the quarter, but at much lower levels than in the past.
“The trade turbulence also negatively affected soybean crush operations in China, as did lower demand for soybean meal for feed following the culling of hogs to control the spread of African swine fever,” Cargill said in its earnings statement.
“In North America, soy and canola crush operations ran at high capacity, but the near absence of the Chinese market for plentiful U.S. soybean stocks reduced profitability.”
Trade tensions also disrupted supply chains. Earnings for Cargill’s starches and sweeteners business also slumped due to U.S. ethanol prices at historic lows.
“Disruptions and uncertainty in the global business environment continued to present challenges during the quarter, but our teams captured greater efficiencies across the company,” said Dave MacLennan, Cargill’s chairman and chief executive officer. “We remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so they can win with consumers in local markets.”