U.S. agribusiness giant Cargill Inc on Wednesday reported a 41 percent drop in quarterly profits as the lingering effects of the 2012 severe drought in the United States reduced grain-handling opportunities.
The company struggled with tight crop inventories in the world's top farm exporter, which kept grain pricey and lowered processing volume and export demand during the summer months.
Minneapolis-based Cargill, one of the world's largest privately held corporations and a top commodities trader, reported $571 million in net earnings for the first quarter ended Aug. 31, down from last year's record quarter of $975 million.
First-quarter revenues of $33.8 billion matched the year-ago period.
"Our agricultural supply chain and food ingredient businesses were focused on helping customers and the company to successfully manage their raw material purchases and inventories during the market uncertainty that precedes the transition to new crops in the northern hemisphere," Cargill's CEO Greg Page, said in a statement.
Quarterly results fell in three of its four business segments. Cargill's animal protein unit - which had been under stress in the past year amid a 60-year low in the U.S. cattle supply and high feed costs - posted a rise due to improved margins, the company said.
While earnings fell in the company's grain origination and processing unit, it was the largest contributor to first-quarter results.
"The segment's South American-based supply chains performed well, utilizing the region's big crops to serve strong export demand. Conversely, in North American farm services, the remaining impact of last year's severe drought in the U.S. Midwest reduced grain handling opportunities in the first quarter," Cargill said.
The company's food and ingredient earnings were disappointing and its energy business, which includes trading in petroleum, coal, power and gas, declined.