Aug. 12, 2003

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Cargill Reports Fourth Quarter and Fiscal 2003 Earnings

MINNEAPOLIS – Cargill today reported net earnings of $141 million for the fourth quarter ended May 31, up 3 percent from $137 million in the same period a year ago.

For the 2003 fiscal year, earnings from operations were $1.036 billion, an increase of 21 percent from $855 million a year ago. These results reflected improved operating results and, as reported earlier, proceeds from litigation settlements. Cargill also realized $254 million from two items: discontinued operations, including the sale of North Star Steel’s tubular steel division; and the adoption of new rules for goodwill accounting. That brought Cargill’s net earnings to $1.29 billion for the full year, compared with $798 million a year ago.

Revenues for the full year rose 19 percent to $59.9 billion. Cash flow from continuing and discontinued operations increased 26 percent to $2.9 billion.

“Cargill delivered a strong performance in a year marked by regional turbulence and slow economic growth,” said Warren Staley, chairman and chief executive officer. “The consistency of our results was driven by four factors: We made progress on our journey to serve customers better. We improved our ability to integrate newly acquired businesses. Our team did an excellent job managing risk and uncertainty in challenging environments. And we kept a constant eye on controlling costs and increasing efficiency.

“Most importantly, we’re building a more enterprising foundation from which to serve customers and grow.”

Staley said the improvement in Cargill’s operating earnings was broad based, with a majority of business units delivering stronger results than a year ago. Especially improved was the overall contribution from the food ingredient businesses in Europe, Latin America and North America. The company’s red meat, egg products and animal nutrition businesses also were solid performers. Significant contributions also came from Cargill’s global grain and oilseed supply chain, and its risk management and financial businesses.

One of the year’s major focuses was the integration of Cerestar and a number of Cargill businesses in Europe and North America. “In its first year, the combined enterprise hit its financial targets, and the important work of unifying our work teams, migrating capabilities and sharing knowledge is well under way, ” said Staley. Cerestar, a premier maker of specialty starches and sweeteners for the food, paper and pharmaceutical industries, is known for its research and development, specialty applications and technical services. These strengths are complemented by Cargill’s operational and supply chain management proficiencies.

During the year, Cargill completed several smaller acquisitions that add depth and market reach to existing businesses. These purchases included the Peter’s Chocolate brand; through a joint venture, the Australian flour milling and mixing business of Goodman Fielder; Provimi Kliba, a leading Swiss animal nutrition company; and the phosphate assets of Farmland Hydro, a Florida-based fertilizer producer.

Looking ahead, Staley said Cargill remains steadfast to becoming a more customer-focused company. “We intend our new Cargill brand to stand for our commitment to collaborating with customers to apply our knowledge and experience in ways that help them succeed. That’s how we can deliver solutions that make a difference. For all of us at Cargill, this is a journey. Both we and our customers have high expectations, and we intend to meet them.”

In fiscal 2003, Cargill began to expense stock options. This elective change in accounting policy reduced Cargill’s earnings by a small amount. For comparability, fiscal 2002 earnings were restated in accordance with transition rules.