The global recession helped sink commodities-processing giant Cargill Inc.'s fiscal-fourth-quarter earnings by 69%, but company executives are beginning to detect an economic rebound in some countries.
"We are cautiously optimistic about the time frame of the recovery," David W. MacLennan, senior vice president and chief financial officer of the closely held Minneapolis company, said Tuesday. "We are starting to see signs of recovery in emerging markets."China is continuing to import U.S. soybeans at a blistering pace, and Brazil's economy is showing signs of strength. But it is far from clear how soon government stimulus money will lift developed economies such as the U.S., where some Cargill businesses have benefited from consumers trading down to cheaper groceries like ground beef.
Cargill on Tuesday said it earned $327 million in the quarter ended May 31, down from $1.05 billion a year earlier. A big drop in fertilizer profit and the third consecutive quarterly loss by its risk-management and financial segment weighed on the results.
While the first half of Cargill's fiscal year was lifted by the 2008 commodity-price boom, during which prices of Midwest crops and fertilizer climbed to unusually high levels, its second half was depressed by the onset of the global recession, which burst the commodity bubble.
Cargill, which doesn't report quarterly revenue or provide segment details, depends on its breadth and diversity to insulate it from volatility in its commodity businesses. But the recession is so broad that it seeped into many of its operations. Cargill is involved in such businesses as making food ingredients from crops it buys around the world and slaughtering U.S. livestock to trading complex financial instruments.
The company owns a 64% stake in U.S. phosphate fertilizer giant Mosaic Co., which is being stung by weakening demand from farmers.
Cargill's risk-management and financial segment generated a fiscal-year loss despite record results from the business that trades and transports coal, electric power, petroleum and natural gas. The segment also includes Black River Asset Management as well as distressed-asset concern CarVal Investors.
For the fiscal year, Cargill earned $3.33 billion, down 16% from the record-high $3.95 billion it earned in fiscal 2008. Cargill generated fiscal-year revenue of $116.6 billion, down 3% from fiscal 2008.
