April 9 (Bloomberg) -- Cargill Inc., the largest closely held U.S. company, said fiscal third-quarter profit dropped 42 percent as the worst U.S. drought since the 1930s reduced supplies of crops and raised feed costs.
Net income fell to $445 million in the three months through February from $766 million a year earlier, the Minneapolis-based company said today in a statement. Sales increased 1 percent to $32.2 billion, Cargill said.
“In North America, our meat processing businesses were pressured by the drought-related high cost of feed ingredients,” Chairman and Chief Executive Officer Greg Page said in the statement.
Earnings in the agriculture-services unit fell due to the “prolonged impact of last year’s drought-reduced crops in North America,” Cargill said. Animal-nutrition profits were affected by Venezuela’s currency devaluation in February and “difficult economic conditions” in meat and dairy production in several regions, the company said.
Profit in the meat business was hurt in North America by higher feeding costs, tight cattle supplies and an oversupplied turkey market, the company said. Cargill idled its Plainview, Texas, beef-processing plant in February after the size of the cattle herd fell to a 60-year low and drought increased feed costs.
Cargill and competitors Archer-Daniels-Midland Co., the world’s largest corn processor, and Tyson Foods Inc., the largest U.S. meat processor, have grappled with smaller and more expensive supplies of corn and soybeans.
While export demand for U.S. soybeans and soybean meal was strong ahead of South America’s harvest, weather delays and logistical challenges in Brazil “significantly reduced soybean and soybean product exports below expectations,” the company said today.
Forbes ranked Cargill the largest closely held U.S. company by revenue in a 2012 survey.
To contact the reporter on this story: Shruti Date Singh in Chicago at firstname.lastname@example.org
To contact the editor responsible for this story: Simon Casey at email@example.com