Milling & Baking News - April 9, 2019 - 34

Financial Results

Cost efficiencies, other savings
buoy Cargill in third quarter

MINNEAPOLIS - Net earnings increased 14% while revenue fell 4%
at Cargill in the third quarter ended
Feb. 28.
"Disruptions and uncertainty in
the global business environment continued to present challenges during
the quarter, but our teams captured
greater efficiencies across the company," said David W. MacLennan, chairman and chief executive officer. "We
remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so
they can win with consumers in local
markets."
Net earnings in the third quarter
totaled $566 million, up from $495
million in the previous year's third
quarter. Adjusted operating earnings,
meanwhile, totaled $604 million, up
8% from $559 million. Third-quarter
revenues decreased 4% to $26.9 billion, bringing the year-to-date figure
to $83.5 billion.
Cargill said operating earnings
across all four business segments were
below the year-ago level. The declines

were offset by reduced spending on
corporate functions and other cost reductions.
The Food Ingredients & Applications business delivered mixed results.
Starches and sweeteners earnings
declined on low ethanol prices in
North America, and higher energy
and raw material costs in Europe.
Lower sales volume and higher operating costs in North America reduced
the cocoa and chocolate performance
in other regions. Edible oils pulled
ahead of last year on good positioning
and operating efficiencies.
Earnings in the Origination & Processing segment were adversely affected by ongoing trade tensions and
other supply chain disruptions.
"In North America, soy and canola
crush operations ran at high capacity, but the near absence of the Chinese market for plentiful U.S. soybean
stocks reduced profitability," Cargill
said. "The trade turbulence also negatively affected soybean crush operations in China, as did lower demand
for soybean meal for feed following

Arcadia highlights advancements
achieved in 'transformative year'
DAVIS, CALIF. - The past fiscal year
was a "transformative" one for food
ingredient company and agricultural
innovator Arcadia Biosciences, Inc.,
the company's president and chief
executive officer told analysts during
a March 27 conference call to discuss
fiscal 2018 financial results.
"We delivered significant regulatory, commercial and scientific advancements in wheat, soy, tomato and safflower," said Rajendra Ketkar, president
and c.e.o. "We emerged as a commercially focused health and nutrition ingredients business serving the food and
consumer packaged goods industries.
We established the GoodWheat brand,
achieved key milestones in resistant
starch wheat and established reduced
gluten wheat on the commercial track."
Also during 2018 Arcadia announced
a collaboration with Ardent Mills, which
Mr. Ketkar described as "an exciting development toward the commercialization of our wheat technology." As part
of the collaborative effort, the companies will introduce a patented approach
to extend shelf life and improve the taste
34 / April 9, 2019

Milling & Baking News

of whole wheat flour, Mr. Ketkar said.
"Ardent Mills is North America's
premier milling company with more
than 40 milling operations across the
U.S., Canada and Puerto Rico," Mr.
Ketkar said. "The project
with Ardent Mills introduces this trait designed
to extend whole wheat
shelf life by slowing the
enzymatic processes that
produce bitterness in
whole wheat flour.
"As Arcadia and Ardent Mills
formed up partnership, we made this
project our first focus because despite
how much nutritionists and dietitians
have come to understand about the
health benefits of whole grains, Americans, on average, consume only onethird of the full daily recommended
whole grain. Research by the Whole
Grains Council shows that taste is the
leading barrier to increase in consumption. Together, we aim to improve the
taste of whole wheat by reducing the
bitterness caused by oxidation in the
flour, and we were successful. Arcadia

the culling of hogs to control the
spread of African swine fever. The segment's European and South American
operations both posted higher profits
over the prior year, with soybean and
soft seed processing leading the way
in Europe, and corn and soybean origination improving in Brazil."
The Animal Nutrition & Protein
segment was the largest contributor
to Cargill's adjusted operating earnings. Within the segment, earnings in
North American protein performed
better than in last year's third quarter,
boosted by continued strong domestic
and export demand for beef as well as
consumer demand for egg products.
According to Cargill, higher production costs at the company's poultry
processing joint ventures in the Philippines and U.K. contributed to a decline in global poultry results.
"Increased sales volumes for salmon feeds in the North Sea region and
functional feeds in North America improved earnings in aqua nutrition, but
animal nutrition results in total trailed
the prior year due in part to the outbreak of African swine fever in China
and other countries, as well as unfavorable dairy economics in the U.S.,"
Cargill said. MBN
received a U.S. patent for this extended
shelf life wheat, and we are continuing
to further strengthen our intellectual
property covering this trait."
Arcadia also completed development of recipes of foods containing
GoodWheat.
In the year ended Dec. 31, 2018, Arcadia sustained a loss of $13,480,000, which
compared with a loss of
$15,707,000 in fiscal 2017.
Total revenues totaled
$1,464,000, down 64%
from $4,026,000 a year
ago. Fiscal 2017 revenues
included $2,042,000 in
contract research and
government grants.
"As we've indicated throughout this
year, our financial results in 2018 reflect
the impact of our transformation from
a predominantly research and licensing business model to one of a consumer products health and ingredients
model," said Matthew T. Plavan, chief
financial officer. "Revenues from our
legacy R.&D. business model wound
down during the year, and our forward
expectations for the onset and scale up
of new revenues from our nutritional
ingredient products over the next 9 to
18 months remains unchanged." MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - April 9, 2019

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