Cargill Reports Worst Quarter in a Decade

Cargill's second-quarter earnings dropped 88 percent from a year ago as the agribusiness faced uncertain markets and fluctuations in sugar prices.

Wayzata-based Cargill, Inc., reported a steep drop in earnings Tuesday, citing “challenges” faced by its commodity-trading and asset management units and poor performance by its meat and sugar businesses.

Earnings for its fiscal second quarter that ended November 30 totaled $100 million-an 88 percent drop from $832 million in the same period last year. Revenues for the quarter rose 17 percent to $33.3 billion from $28.5 billion a year ago.

This was Cargill's worst quarter in terms of profits since 2001's fourth quarter, when the company reported a loss of $87 million, according to a Star Tribune report. This is also the second consecutive quarter in which the company's earnings were down steeply from a year ago; it reported a 66 percent drop in its fiscal first quarter profits, which totaled $236 million.

“The second quarter was significantly below expectations, especially in contrast to last year when we posted our strongest quarter ever,” Cargill CEO Gregory Page said in a statement. “Our food ingredients and agriculture services businesses generated solid earnings. At the same time, our commodity-based trading and asset management businesses faced significant challenges.”

Page said that in addition to the commodity and financial markets facing “political uncertainties,” the company's meat businesses experienced “one of their weakest quarters” and Cargill's performance in the sugar market was poor.

Cargill spokeswoman Lisa Clemens told Bloomberg that the sugar unit's sales declined after sugar prices rose in early October and then fell “dramatically” by the end of the month.

Page said in a statement that Cargill is working to cut costs and simplify work processes. The company last month announced plans to lay off up to 2,000 employees-or 1.5 percent of its global workforce-in an effort to reduce expenses.

In other earnings news, Eden Prairie-based grocery giant Supervalu-for its fiscal third quarter that ended in December-reported a net loss of $750 million, compared to a loss of $202 million for the same quarter the prior year. Meanwhile, revenues fell 4 percent from a year ago to $8.33 billion.

Excluding unusual costs-including one-time costs for store closings and employee severance packages-the company earned 24 cents per share, a penny shy of Wall Street expectations.

Cargill is Minnesota's largest private company based on revenue, which totaled $119.5 billion in its most recent fiscal year. Supervalu is Minnesota's fourth-largest public company based on revenue, which totaled $37.5 billion in its fiscal year that ended in February 2011.