Cargill Profits Jump

NEW YORK - Aug 19/08 - SNS -- Cargill reported earnings of U.S. $744 million during the fourth quarter ending May 31, compared to earnings of $628 million during the same three month period last year. Additionally, a $310 million gain on the sale of discontinued operations brought fourth-quarter net earnings to $1.05 billion.

For the full fiscal year, Cargill earned $3.64 billion from continuing operations, a 55% increase from $2.34 billion a year ago. The $310 million gain on the sale of discontinued operations in the fourth quarter brought fiscal 2008 net earnings to $3.95 billion. Revenues for the full year rose 36% to $120.4 billion. Cash flow from operations increased 77% to $7 billion.

The company said its investment in the fertilizer industry also contributed significantly to company results. Since 2006, global demand for crop nutrients has surged in response to the world's increased need for higher crop yields to meet rising demand for food and agricultural commodities.

Among Cargill's five business segments, fourth-quarter earnings were led by the origination and processing segment and the industrial segment, both of which were up substantially from the same period a year ago. Earnings in agriculture services, food ingredients and applications, and risk management and financial were below the year-ago levels for the three segments.

For the full year, earnings were led by origination and processing, which increased results substantially from last year's level. The industrial segment, which includes Cargill's investment in the fertilizer business, also posted exceptionally strong earnings. Both the agriculture services and the food ingredients and applications segments were well ahead of last year. Earnings in risk management and financial declined moderately from last year's high, though outstanding performances in several areas reflected the segment's diversification.

In assessing economic forces at work in the world, Greg Page, Cargill chairman and chief executive officer, noted that growth in gross domestic product among the world's developing economies has averaged more than 6% a year since 2000. Although this expansion is projected by the International Monetary Fund and others to slow somewhat in 2008 and 2009, it has given millions of people the means to improve their diets, which has lifted demand for grains and oilseeds. Underpinned by high oil prices and government mandates and subsidies, global production of biofuels also has boosted demand. Yet world grain stocks sit at 35-year lows, drawn down by weather-affected crops and slower growth in average crop yields worldwide. The tight dynamic sent prices and price volatility in fiscal 2008 to new highs and elevated energy prices increased the cost of producing and transporting agricultural commodities.

Page said the world has the means to give agriculture the chance to catch up with demand. "If markets are allowed to work, today's prices can spark a supply response from farmers. A rekindling of public and private investment in agriculture and in rural infrastructure will drive productivity gains."