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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Jim Spitz who wrote (33008)	8/15/2001 8:59:51 AM
From: Jim Spitz	Read Replies (1) \| Respond to of 37746

Cargill's annual earnings fall 25 percent Bloomberg News Wednesday, August 15, 2001 Cargill Inc., the nation's largest agricultural company, said its fiscal fourth-quarter loss increased because of higher energy costs and weak demand for flour, fertilizer and steel. Cargill reported a loss of $87 million in the three months ended May 31, compared with a loss of $6 million in the year-earlier period. The losses in both quarters included charges associated with closing plants, firing workers and lowering the asset value of some units, company spokeswoman Lisa Clemens said. Minnetonka-based Cargill has been shedding non-agricultural businesses and investing in its U.S. meat production and ethanol operations. The closely held company has sold, or is in talks to sell, its liquid carbon-dioxide and steel units, as well as its salt business in Australia. "We may be trimming around the edges, but we'll continue to be a diversified company," Cargill Chief Financial Officer Robert Lumpkins said. "We intend to continue to be a broad-line player in agribusiness." For the full fiscal year, Cargill reported profit from operations of $557 million, down from $659 million a year earlier. Restructuring charges and losses from discontinued operations resulted in net income of $358 million in the most-recent year and $480 million a year earlier. Revenue for the full year rose 4 percent to $49.4 billion. Cargill fired 80 workers and closed three of its 19 U.S. flour mills May 31, after excess production by Cargill, ConAgra Foods Inc. and other grain processors depressed prices. The shutdowns reduced Cargill's flour-making capacity 12 percent to 11,000 tons a day. Competition from overseas steelmakers and fewer U.S. orders for steel bars used in building and highway construction reduced the profitability of Cargill's North Star Steel unit, the No. 2 U.S. maker of steel bars. Steel bar prices averaged $282 a ton during the three months ended May 31, down 16 percent from the same period a year earlier. Fertilizer sales suffered as the soaring cost of natural gas, the main ingredient in nitrogen-based fertilizer, quadrupled retail prices in some areas. Some farmers curtailed fertilizer purchases on concern that low grain prices would generate insufficient income to cover costs, analysts said. Corn prices averaged $2.08 a bushel in the quarter ended May 31, down 11 percent from $2.35 a bushel a year earlier. In addition to closing flour and soybean mills this year, Cargill has fired 350 workers at its Excel unit, the second-largest U.S. producer of beef, and spent $15 million last month to close its slaughterhouse in Marshall, Mo. The plant is being converted to package smaller cuts of meat for supermarkets. IBP Inc., based in Dakota Dunes, S.D., is the largest U.S. beef company. Cargill is the second-largest U.S. maker of high fructose corn syrup -- a sweetener used in soft drinks, candy, baked goods and snack foods -- and is one of the top three makers of ethanol, a corn-based gasoline additive. Last week, the company announced a joint venture with Hong Kong-based Global Bio-Chem to build a corn sweetener factory in Shanghai. Archer Daniels Midland Co. is No. 1 in the $2 billion corn sweetener market. Cargill also makes starches, animal feed, fertilizer and amino acids and has grain trading, storage and shipping operations around the world. In April, Cargill paid $535 million for Agribrands International Inc., maker of Purina and Chow animal feeds. The company is in discussions to sell its North Star Steel unit, which makes seamless pipes used in oil drilling, to Maverick Tube Corp. of Chesterfield, Mo. In July, Cargill sold its Australian salt unit to Rio Tinto Group for $95 million, with a provision for increased payments, depending upon how well the business performs. Cargill sold its liquid carbon-dioxide plant Eddyville, Iowa, to EPCO Carbon Dioxide Products last month. Terms weren't disclosed. © Copyright 2001 Star Tribune. All rights reserved.