Cargill posts Q4 loss on one-time charges, revenue down

Reuters — Cargill Inc. on Thursday became the latest large agribusiness to report disappointing quarterly results as one-time charges and slowing economies in key emerging markets stung the privately held global commodities trader.

Minnesota-based Cargill said it lost a net $51 million in the fiscal fourth quarter ended May 31, compared with a profit of $376 million a year earlier (all figures US$). The year-earlier profit was revised downward from $424 million as the company corrected a charge tied to a Venezuelan currency devaluation.

Revenue fell 22 per cent to $28.4 billion, from $36.2 billion.

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Agribusiness rivals Archer Daniels Midland and Bunge each reported weaker-than-expected results in the past week, despite massive U.S. harvests last year that increased the volume of available grain for the companies to transport, process and store.

The companies, along with Louis Dreyfus, make up the “ABCDs” that dominate global agricultural trade.

Cargill’s origination and processing unit profit lagged the year-earlier quarter as large global crop stockpiles limited price volatility and reduced trading opportunities for moving commodities from plentiful regions to areas of scarcity.

The segment was also stung by slow farmer selling in South America and weak results in Ukraine, where a processing plant was evacuated last year after being taken by armed insurgents, Cargill said.

High North American beef prices relative to other meats hurt Cargill’s animal nutrition and protein segment in the quarter while an economic slowdown in emerging markets led to lower earnings in its food and ingredients unit.

But the 150-year-old company defended its investments in less stable regions of the world and said it has a history of rising to challenges.

“We’re working against a socioeconomic environment that isn’t all that conducive to our business model, but we’re fine with that,” chief financial officer Marcel Smits said in an interview.

“We don’t live from quarter to quarter as a private company. At some point in time the markets will turn and we’ve got to make we’re positioned well.”

One-time charges taken in the fourth quarter included asset impairment related to Cargill’s internal resource planning system and another charge tied to the drop in value of Venezuela’s currency.

Smits said the worst of Cargill’s pain from the plummeting bolivar was behind it.

The company’s industrial and financial services segment was a bright spot, turning in a higher year-on-year quarterly profit on good bets on the tumbling crude oil market.

Karl Plume reports on agriculture and ag markets for Reuters from Chicago.

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