Cargill sees revenue growth in meat

After three consecutive quarters of volatility and headwind in the global beef industry, stabilisation in North America carried Cargill to animal protein earnings growth in Q4. Stalled sales in emerging markets may have seen full-year earnings to 31 May recede on last year’s figures, but the Q4 performance vindicates a long-term strategy of divestment with Cargill on a path to strengthen its financial capabilities.

In the last 12 months the business has offloaded around $2.4bn worth of assets – including two cattle feedlots to Friona Industries​ and a number of pork processing plants.​

Competitive streak​

David MacLennan, Cargill’s chairman and CEO, described the divestitures as “important changes​” that would ensure the business is “more competitive in the sectors where we intend to lead​”. Cargill is also making efforts to reduce the reliance on antibiotics in its supply chains, and earlier announced plans to cut antibiotic use in turkeys.​ 

Full-year revenue was reported at $107.2bn, an 11% slide on the year before. Cargill said this was the result of weak commodity prices, a strong US dollar and its divestiture strategy. MacLennan said he believes Cargill is in a strong position for “higher performance and sustained growth.​”

This may be reflected in the $3bn worth of investments and acquisitions​ the company has made in the last 12 months. Investments that include a $500m plan to grow its North American protein line​ and a joint-venture with Philippine foodservice giant Jollibee Foods​, leading to 1,000 new jobs. In addition, Cargill acquired Norwegian salmon nutrition firm EWOS, for a fee of €1.3bn ($1.5bn).

Deforestation promise​

“We have more work to do, but where we have already made changes we are seeing improved results,​” said MacLennan. He added that the performance was strong in global value-added meat and poultry. And by optimising efficiency at processing plants and supply chains, Cargill saved over $200m. 

The business has also moved forwards in its sustainably plan to halt deforestation and has recently put out a forest policy plan to protect resources in critical supply chains. The business has joined forces with the World Resources Institute in a bid to develop sustainable ways for big business to use water and forest resources.