Agribusiness giant Cargill Inc said on Thursday quarterly earnings rose strongly, boosted by all five main business segments, but cautioned the impact of the worst U.S. drought in a half century was still unfolding.
Minneapolis-based Cargill, one of the world's largest privately held corporations, reported net earnings of $975-million (U.S.) for the first quarter of fiscal 2013 ended Aug. 31, versus $236-million for the same quarter a year ago.
The profit compared with $73 million for the March-May quarter - its lowest quarterly earnings since 1991.
Revenues for the first quarter dipped to $33.8-billion from $34.6 -billion a year earlier, the company said in a statement.
Cargill Chief Executive Greg Page said the improved performance was due to the broad reach of its operations into most major areas of the world's food production systems.
But he warned the full effects of drought and other weather- related damage to U.S. and world crops were still working through the supply chain and would challenge food processors, livestock feeders and exporters in the months ahead.
Cargill said quarterly results were balanced, with improved earnings across all five business segments. There were no significant losses in any one business unit and results benefited from efforts in the past 12 months to lower costs, streamline work flows and reassess capital spending.
"By investing steadily, we've been able to significantly boost the breadth and depth of the products and services we offer our customers," Page said. "And that has strengthened the balance, diversification and resilience we strive for in our business."
He added that Cargill has spent $8.1-billion on supply-chain investments in the last two years.
The company said the drought in the United States, the largest exporter of corn, soybeans and wheat as well as other food products, will continue to present challenges but crop damage in other areas, notably the Black Sea region in Europe, will do the same.
"The impact of the drought on Cargill's business has been mixed and will continue to be so in the months ahead. The weather has altered the normal distribution of raw materials around the world, and that is pushing more international buyers to non-U.S. origins. As a result, Cargill expects more atypical trade flows," the company said in a statement. "Cargill's North American grain handling volumes for exports are anticipated to be lower than pre-drought expectations, and it may be a challenging year for the company's animal protein businesses globally."
Cargill employs 142,000 people in 65 countries. Its main businesses are in agricultural services, food ingredients, food and crop processing, risk management and an industrial sector that includes metals, salt and other commodities.
Cargill reported weak results in three of the four quarters in fiscal 2012, citing volatile commodity markets and soft world economic growth, even before the drought began hurting crops and livestock across the U.S.
On Aug. 15, Standard and Poor's revised its outlook for Cargill to negative from stable, citing doubts about a 2013 earnings rebound. But S&P reaffirmed Cargill's strong credit ratings.
Investors' confidence in Cargill as one of the strongest players in the cyclical and volatile world commodity markets was underscored on Aug. 29, when the company's 500 million euro bond issue was eight times oversubscribed.