Oct. 15, 2002

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Cargill Reports First-Quarter 2003 Earnings

MINNEAPOLIS –– Cargill today reported $345 million in earnings from continuing operations for the 2003 first quarter ended Aug. 31, up 25 percent from $277 million in the same period a year ago.

Additional earnings of $254 million were realized from nonrecurring items, including the sale of North Star Steel's tubular division and the adoption of new rules for goodwill accounting set by the Financial Accounting Standards Board. Including the one-time items, Cargill earned $599 million in the first quarter, compared with $288 million a year ago.

“We are pleased with Cargill’s very solid operating performance in the first quarter,” said Warren Staley, chairman and chief executive officer. “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.”

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. Cargill Animal Nutrition continued to realize value-producing and cost-reducing synergies from last year’s integration of Agribrands International.

Beef processing benefited from steady consumer demand, but earnings among the meat businesses, though improved from a year ago, were tempered by depressed hog prices in swine production and large supplies of competing meats.

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 endeavor.” Cargill acquired Cerestar in the fourth quarter of fiscal 2002.

Staley confirmed that strategic acquisitions will continue to be a part of Cargill’s plan for growth. During the first quarter, the company announced an agreement to acquire Swiss animal nutrition company Provimi Kliba. A new joint venture between Cargill and Australia’s GrainCorp was selected by Australian food maker Goodman Fielder to purchase its flour milling and mixing business. Both Provimi Kliba and Milling Australia have built long-term relationships with customers that have made them leaders in their respective markets. The Australian acquisition was completed in early October.

“Today’s results mark the progress we are making on Cargill’s journey to become the premier provider of customer solutions in food and agriculture,” said Staley. He noted that fiscal 2003 is expected to be challenging, given the rising tensions in the Middle East, the troubles in South America and the uncertainty of global economic recovery. “We are committed to helping customers manage the market uncertainties these risks present, and to keeping Cargill on a high-performance course.”