USA, Minneapolis: Cargill reported on January 11 net earnings of $1.012 billion for the 2005 second quarter ended Nov. 30. These results included earnings from continuing operations of $956 million, which included a one-time, noncash net gain of $597 million related to the formation of The Mosaic Company. The company also earned $56 million from discontinued operations. Excluding the gain, Cargill’s second-quarter net earnings were $415 million. Last year’s second quarter included an unrelated special item. Excluding the special items in both periods, Cargill’s second-quarter 2005 net earnings were up 3 percent from a year ago.

The $597 million net gain was related to the recently completed combination of the former crop nutrition businesses of Cargill with IMC Global, which formed The Mosaic Company, a new, publicly traded company in which Cargill is the major investor. Under GAAP, 33.5 percent of the net fertilizer assets contributed by Cargill to the business combination were required to be recorded as a sale, which generated a noncash gain of $632 million offset by about $35 million in merger-related costs.

The $56 million in earnings from discontinued operations was primarily operating income generated by steel assets prior to their sale on Nov. 1, 2004.

In the 2005 first half, Cargill’s net earnings were $1.507 billion. These results included earnings from continuing operations of $1.413 billion, which included the $597 million noncash net gain. The company also earned $94 million from discontinued operations. Excluding the gain in the second quarter and the special item in the year-ago period, Cargill’s first-half net earnings were $910 million, up 22 percent from a year ago.

“Cargill delivered solid operating results and began important growth initiatives in the second quarter,” said Warren Staley, Cargill chairman and chief executive officer. “We announced plans to expand in food-producing areas such as Brazil and in growing consumption markets such as India. We also completed the formation of Mosaic. These are important initiatives that advance Cargill’s intent to be a global leader in nourishing people.”

Cargill’s second-quarter operating results reflected strong performance from its risk management and financial segment, and improved contributions from parts of its food ingredients, animal nutrition, and origination and primary processing operations. The company also realized strong earnings from its steel assets prior to their sale to Gerdau Ameristeel on Nov. 1, 2004.

At the start of the second quarter, Cargill announced plans to purchase a majority share of Seara Alimentos, a leading Brazilian poultry and pork processor, and to make a tender offer for Seara’s remaining shares. Pending necessary approvals, completion is expected in early March.

The company also announced agreements to purchase a majority share of Olpo, a Romanian producer of edible oils, and to form a joint venture with Parakh Foods, majority owned by Cargill, that would combine the two companies’ vegetable oil businesses and supporting brands in India. Both agreements are subject to regulatory approval.

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