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Agribusiness giant Cargill profits rise 34 percent

Associated Press
January 16, 2007

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Agribusiness giant Cargill said earnings rose 34 percent to $662 million (€511 million) in its fiscal second quarter on strong results from selling and shipping commodities and in its financial trading unit.

Cargill said it earned $1.16 billion (€900 million) for the six months ended Nov. 30, up 16 percent from $999 million (€771 million) a year ago. Cargill is privately held and releases limited financial results, and it did not release a revenue figure on Tuesday. The company said the profits were its strongest operating results ever.

"Similar to the first quarter, we experienced fast-changing markets in the second period, brought about by the interest in biofuels, investor flows into commodity futures and other markets offering diversification, and expansionary economies in many parts of the world," said Chairman and Chief Executive Warren Staley.

Cargill said the quarterly profit increase was driven by origination and processing, which handles buying and shipping commodities such as corn, wheat, and soy beans, and by its risk management and financial arm, which makes investments in commodity prices and other financial markets. It said both units "increased results significantly" from the same period last year.

It said its food ingredients and applications segment posted a "modest" increase from a year ago, while the performance of its agriculture services unit slipped.

Last week Cargill announced plans through a subsidiary to build four new ethanol plants to nearly triple the ethanol production it directly owns.

Corn prices have rocketed to new highs on increased demand for use in ethanol. And ethanol prices are up, too. Cargill had been cool to the ethanol boom, and it raised questions about balancing the needs for food versus fuel. It had taken a cautious approach to ethanol compared with competitor Archer Daniels Midland Co.

Cargill employs 149,000 people in 63 countries.

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