Cargill fourth-quarter profit dives 41% on trade tensions, U.S. floods

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CHICAGO (Reuters) – Commodities trader Cargill Inc [CARG.UL] reported a 41% slump in adjusted quarterly profit on Thursday, citing supply disruptions stemming from the U.S.-China trade war and also flooding in the central United States that hit marketing and transportation of grains.

Cargill fourth-quarter profit dives 41% on trade tensions, U.S. floods

FILE PHOTO: A Cargill logo is pictured on the Provimi Kliba and Protector animal nutrition factory in Lucens, Switzerland, September 22, 2016. REUTERS/Denis Balibouse/File Photo

The privately held company’s adjusted operating profit fell to $476 million in the fourth quarter ended May 31 from $809 million a year earlier. (bit.ly/2XGioon)

The Minnesota-based food commodities firm, the largest privately held U.S. company, said three of its four business units posted lower year-on-year results.

“Throughout the year, we faced a very challenging global business environment that slowed earnings,” CEO Dave MacLennan said in a news release.

Trade tensions between Washington and Beijing have battered the U.S. agricultural sector as tit-for-tat tariffs have reduced commodities exports from the United States and redrawn global trade flows. Severe spring flooding across the U.S. farm belt added to the struggles.

Cargill’s animal nutrition and protein segment posted a lower year-on-year profit for the third time in four quarters as poor weather disrupted U.S. Midwest cattle shipments and reduced demand for beef for outdoor grilling.

Reduced hog feed demand in China, where a deadly hog disease called African swine fever has decimated the industry, further dampened results, Cargill said.

Profit for Cargill’s origination and processing business fell from an exceptionally strong fourth quarter last year as flooding across the central United States disrupted grain transportation and exports.

River flooding halted grain barge shipments from a large swathe of the Midwest farm belt this spring, forcing exporters to tap costlier rail shipments to meet their export commitments.

Also, U.S. farm product exports faced stiff headwinds as tariffs on U.S. goods imported by China, the world’s top soybean buyer and major importer of various other agricultural goods, remain in place.

Lower sweeteners and starches profits weighed on Cargill’s food ingredients and applications unit in the quarter.

The company’s industrial and financial services segment posted stronger quarterly earnings, led by improved profit in metals, risk management and trade finance.

Reporting by Karl Plume in Chicago, additional reporting by Shanti S Nair and Debroop Roy in Bengaluru; Editing by David Gregorio