Agribusiness giant Cargill posted a 14% increase in quarterly profit as growing consumer demand for beef offset depressed prices for grain and other commodities.
Cargill’s first-quarter net income rose to $973 million from $852 million a year ago while adjusted operating profit rose 7% to $888 million. Revenue edged up slightly to $27.3 billion from $27.1 billion.
“We’re off to a good start in our new fiscal year, powered by the significant work we’ve done over the last few years and continuing to accelerate our performance,” Cargill CEO David MacLennan said in a news release. “Even as market conditions vary across our sectors, our teams are delivering for our customers and achieving results to fuel future growth.”
Cargill’s standout sector continues to be animal nutrition and protein, which saw a significant increase in adjusted operating earnings.
“Protein results in North America were lifted by brisk consumer demand for beef, strong exports and more abundant cattle supplies, resulting in better utilization of processing capacity,” the company explained.
As the Minneapolis Star Tribune reports, “The U.S. cattle supply has fully rebounded following years of drought in Texas and the southern Plains states, meaning Cargill can process more cattle through its massive slaughterhouses and sell beef to customers. This is passed on to consumers who are responding by buying more beef.”
The second-largest contributor to Cargill’s gains was its food ingredients business, led in most regions by cocoa and chocolate products, as well as food sweeteners and starches.
Cargill said global demand for grain and oilseeds continues to grow, but rising production and building global stocks during the last four crop cycles has depressed market volatility and commodity prices. As a result, the company’s origination and processing business was down from last year’s strong comparative quarter.
Global poultry slightly lagged the year-ago period amid weaker sales in Central America but Cargill has been investing in that business. At the start of the quarter, it acquired Pollos El Bucanero, a leading producer of chicken and processed meats in Colombia.