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Cargill Sees Profit Double in Fourth Quarter

Company achieves sizable gains powered by greater integration worldwide

Cargill Inc.'s quarterly profit doubled and its yearly net income grew for the third consecutive year, even as the agriculture behemoth frets over a U.S.-China trade war, reports the StarTribune.

In its earnings release, Cargill, Minnetonka, MN, reported $3.2 billion in adjusted operating earnings for the 2018 fiscal year, one of its best performances.

The company’s improved financial results over the past two years are the outcome of significant efforts by its teams to redefine how Cargill operates, says the release.

The StarTribune says the company recorded its third straight year of growth in 2018 with a $3.1 billion profit, up 9 percent from last year. Cargill outperformed its high 2017 financial marks across all of its core businesses: grain trading, food ingredients and protein — including beef, eggs and animal feed. Its industrial and financial services business posted the only segment decline with lower returns from its fund investments and a soft fourth quarter.

Key results for the quarter and fiscal year ended May 31, 2018,* include:

Fourth quarter:

  • Adjusted operating earnings totaled $809 million, a 76% jump from $460 million a year ago
  • Net earnings on a U.S. GAAP basis were $711 million, more than double last year’s $347 million
  • Revenues increased 7% to $30.4 billion

Full year:

  • Adjusted operating earnings reached $3.2 billion, up 6% from last year’s strong comparative of $3.04 billion
  • Net earnings equaled $3.1 billion, a 9% increase and the third straight year of improved performance on a U.S. GAAP basis
  • Both adjusted and net earnings included a provisional net charge of $86 million related to the U.S. Tax Cuts and Jobs Act enacted in December 2017. This represents a decrease from the estimate provided in the company’s third-quarter release
  • Revenues grew 5% to $114.7 billion
  • Cash flow from operations increased 11% to $5.22 billion

Reporting broad-based progress

On Aug. 7, Cargill will release its annual report for fiscal year 2018. It includes examples of how Cargill is advancing world-class capabilities in digitalization and analytics, risk management, sustainable supply chains, and more.

As an illustration of this type of work, during the fourth quarter the company launched a three-year project with Nestlé Purina and The Nature Conservancy that will use technology to improve the sustainability of the beef supply chain.

Smart weather sensors in fields of row crops will enable farmers to make more informed irrigation decisions. This will correspondingly improve the water use of beef supply chains, as cattle consume feed made from these crops.

The project will take place in the U.S. state of Nebraska – an important area for food production – but will seek to develop methods that are broadly scalable. Nebraska was selected because it has the largest share of irrigated acres in the U.S. and the second-largest cattle population

*This earnings release is published prior to the completion of Cargill’s fiscal 2018 audit; results shown are unaudited.

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