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Food ingredients fuel Cargill growth

16-Oct-2002

Agribusiness giant Cargill said on Tuesday that strong results from its food ingredient and grain and oilseed businesses worldwide had helped the company boost earnings from continuing operations by 25 per cent in the first quarter.

The privately owned company recently gained a slice of the European food ingredients market with the purchase of French starch producer Cerestar.

Cargill earned $345 million (€351m) from continuing operations in fiscal 2003's first quarter ended 31 August from $277 million in the same period a year earlier.

Additional earnings of $254 million came from one-time items, including the sale of North Star Steel's tubular division and adoption of new accounting rules. Including nonrecurring items, Cargill earned $599 million, compared with $288 million a year ago.

"Our growth was driven by a balance of four factors: we did a better job tailoring our supply chain and risk management services to the needs of individual customers, we captured synergies from recent acquisitions, we exercised good risk management in markets with increased volatility or economic weakness, and we kept a steady focus on controlling costs while increasing operating efficiency," said Warren Staley, chairman and chief executive officer.

The majority of Cargill's food ingredient businesses around the world posted stronger results than a year ago. Its global grain and oilseeds network also performed well as customers, concerned about drought conditions in the United States, Canada and Australia, strengthened demand for the company's supply chain and risk management services.

Staley said the integration of Cerestar in Europe and the United States is on track. "We have a year-long process to complete, but the commitment to bringing better ideas to the marketplace is firmly in place. Cerestar's innovation capacity and in-depth knowledge of its food, feed, pharmaceutical and industrial customers adds substantial strength to that endeavour." Cargill acquired Cerestar from Italian energy company Edison in the fourth quarter of fiscal 2002.

While beef processing benefited from steady consumer demand, Cargill reported that earnings among its meat businesses, though improved from a year ago, were reduced by depressed pig prices and large supplies of competing meats.

The CEO confirmed that strategic acquisitions will continue to be a part of Cargill's plan for growth as the company continues its 'journey to become the premier provider of customer solutions in food and agriculture." The upbeat results do little to doubt his ambitions.

Earlier this week Wilbur Chocolate, a subsidiary of Cargill, announced the purchase of industrial chocolate supplier, Peter's Chocolate, from Nestle USA.

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