Cargill posts first loss in 14 years amid global challenges

Cargill, one of the world’s biggest agricultural companies, has reported its first loss in 14 years, amid global challenges including conflict in Ukraine and farmers in Latin America holding on to crops. 

The company reported a loss of US$51m (£32.87m) in its fourth quarter ending 31 May 2015. Revenues dropped US$7.8bn (£5bn) to US$28.4bn (£18.31bn) in Q4 compared with the same period in 2014.

See also: Grain prices come under further pressure

Over its full financial year, Cargill’s sales and other revenues plunged 11% to US$120.39bn (£77.6bn) and earnings fell 13% to US$1.58bn (£1.02bn). 

The company blamed the loss on a write down of company assets among other things, including of an IT system for resource planning and the fall of the “bolivar” – Venuzuela’s currency, where Cargill has operations.

Cargill’s president and chief executive David MacLennan, said: “While several Cargill businesses generated very strong earnings in fiscal 2015, we lagged results from the prior year and did not meet our own expectations.

“The economic environment remains sluggish in many emerging markets where we have invested significantly over the past several years.”

Each segment of the business performed well, but still faced challenges.

Challenges faced by Cargill globally

• High cattle costs in the US decreased beef’s competitiveness relative to other meats, impacting Cargill’s animal feeds businesses
• Ukraine – Cargill’s sunflower seed processing plant had to be evacuated and then guarded by armed personel after political tensions with Russia flared up in Donetsk
• Latin America – bumper crops over last few years rebuilt stocks of crops globally, reducing price volatility and limiting market opportunities for many of the company’s segments
• Argentina – company performance took a battering as farmers held on to crops under adverse economic conditions
• Brazil – farmers were slow to sell crops due to low prices for corn and soya beans globally
• Emerging markets – economic slow down and excess industry capacity impacted earnings in food ingredients

Cargill provides food, agriculture, financial and industrial products and services globally. The corporation has 153,000 employees in 67 countries.