USA: Cargill reports second-quarter fiscal 2006 earnings

Cargill reported on January 16 net earnings of $495 million for the 2006 second quarter ended Nov. 30, up 19 percent from $415 million in the same period a year ago, excluding the $597 million, noncash net gain realized in last year’s second quarter related to the formation of The Mosaic Company.

In the first six months, Cargill earned $999 million, a 10 percent increase from $910 million a year ago excluding the one-time net gain.

“Cargill delivered a solid quarter in a period marked by high energy prices and operational disruptions at the U.S. Gulf in the wake of Hurricanes Katrina and Rita,” said Warren Staley, Cargill chairman and chief executive officer. “Our team did an excellent job serving customers and managing costs. We also were delighted that Cargill’s egg further processing subsidiary, Sunny Fresh Foods, received for the second time the Malcolm Baldrige National Quality Award, the highest recognition for performance excellence that a U.S. company can receive.”

Cargill’s second-quarter results were led by two segments: global origination and processing, and risk management and financial, especially the value investing activities. Other key contributors to company earnings were U.S.-based farm services, which benefited from large U.S. corn and soybean crops, the U.S.-based food ingredient businesses and the global group of poultry and pork businesses.

The company continued to expand its global supply chain. In November, Cargill and joint venture partner Temasek Holdings, an Asia investment group headquartered in Singapore, acquired UK-based CDC Group’s palm plantation interests in Indonesia and Papua New Guinea. Cargill’s existing plantation in Sumatra also became part of the new joint venture, registered in Singapore as CTP Holdings. Demand for palm oil is growing globally and production worldwide is about 30 million tons. The venture enables Cargill to provide customers with a high-quality supply of palm oil products and adds further diversity to the company’s portfolio of edible oil offerings made from corn, soybean, rapeseed, cottonseed and sunflowerseed.

In early September, Cargill purchased two grain elevators in the Krasnodar region of Russia and a grain import-export terminal in Rostov on the River Don. A fourth facility, a grain elevator located in Russia’s Voronezh region south of Moscow, was purchased in early December. The acquisitions are expected to improve Cargill’s ability to serve customers in Russia and elsewhere with raw materials originated in the Black Sea region.

Cargill and Louisiana Sugar Cane Products, a cooperative of 10 Louisianan sugar cane mills and 700 growers, announced their intent to form a joint venture to construct and operate a large sugar refinery in Reserve, La. The facility is aimed at providing U.S. food and beverage makers with refined sugar products. The joint venture expects to break ground this spring and be ready to commence operations two years later.

Cargill also announced plans to add a 110-million-gallon-a-year ethanol plant to its corn processing complex in Blair, Neb. The new facility will more than double Blair’s existing ethanol capacity and raise Cargill’s U.S. ethanol production capacity to 230 million gallons annually. Cargill also is expanding in biofuels in Europe. It is building a biodiesel plant in southwest Germany in Frankfurt/Main. The company currently operates a biodiesel facility in Wittenberge, south of Hamburg, in a joint venture with Agravis Raiffeisen.

Cargill is an international provider of food, agricultural and risk management products and services. With 124,000 employees in 59 countries, the company is committed to using its knowledge and experience to collaborate with customers to help them succeed.

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