The industry faced several headwinds in 2022, including a choppy supply chain and inflation, but late in the year these problems began to modestly improve and the trend should continue into 2023, CEO Scott Wine told analysts.

The Italo-American farming and construction machine maker forecast its 2023 free cash flow (FCF) of industrial activities at between $1.3 billion and $1.5 billion, compared with $1.6 billion last year (all figures US$).

In spite of a lesser impact of inflation on some areas, Wine said price rises would still have to be part of the company’s strategy going into 2023.

Looking further ahead, he said, “we’re not saying that 2024 is going to be a horrible year” but added that “it’s unlikely that this very strong ag (agriculture) markets we’ve experienced for years is going to go on forever.”

The combine harvesters producer has re-positioned itself in recent years to fit its declared aim of feeding a growing world population.

The group has accelerated its investments in agriculture with a focus on automation and precision technology such as driverless tillage or seed-by-seed planting to deliver higher yields, cut costs, and lower its ecological impact.

Agriculture accounted for over 80 per cent of CNH’s industrial revenues in the fourth quarter. Overall sales from industrial activities rose 31 per cent at constant currency to $6.35 billion, pushed by favourable price trends and higher volumes.

Its adjusted operating profit of industrial activities rose to $680 billion, beating analysts’ expectations of $566 million based on a market consensus provided by Intesa Sanpaolo.

Earlier on Thursday the group said it was planning to delist from Milan and keep its shares trading only in New York.

Wine said the company was targeting the sole listing by the end of this year but it could be delayed until 2024.

‘Improvements’

CNH, which will propose an annual cash dividend of about 38 cents per share, also said it welcomed the end of a strike by two local unions at its factories in Wisconsin and Iowa.

The company said Jan. 23 its unionized workers at Racine and Burlington have voted to ratify a “last, best and final” offer it presented following mediation.

About 1,100 workers at the two plants, represented by the United Auto Workers (UAW), had been on strike since early May 2022.

The Racine plant makes Case IH Magnum tractors, transmissions for the company’s Axial-Flow combines and axles and valves for other ag applications. The Burlington plant makes harvest headers for Case IH and New Holland combines; it also makes backhoes, forklifts and crawler dozers.

The UAW, in a separate release Jan. 23, said the deal provides for “wage increases, shift premium increases (and) classification upgrades as well as other improvements.”

“Our negotiators tenaciously bargained to the very end, even fighting for contract improvements in the face of threats from (CNH) to hire permanent strike replacements,” UAW vice-president Chuck Browning said in the release.

— Reporting for Reuters by Federica Urso and Federico Maccioni. Includes files from Glacier FarmMedia Network staff.

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The company posted a third-quarter net profit of 4.01 billion reais (C$1.001 billion), while analysts polled by Refinitiv had expected it to land at 3.75 billion reais.

Net revenue grew 6.8 per cent to 98.9 billion reais, mainly driven by 22.3 per cent sales growth at its brand Seara and its Australian unit, that reported growth of 19.5 per cent.

JBS Beef North America, usually the firm’s cash cow, had revenue of 29.15 billion reais, down 4.8 per cent from the previous year.

“As the U.S. beef business margin normalizes, we observe a strengthening of the segment in the Brazilian and Australian markets,” JBS CEO Gilberto Tomazoni said.

The beef unit in North America reported adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of 2.52 billion reais, a sharp 67.5 per cent decline from a year ago.

The unit’s operational profitability, measured by its EBITDA margin, fell 16.7 percentage points to 8.7 per cent.

— Reporting for Reuters by Nayara Figueiredo; writing by Peter Frontini.

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Top fertilizer producers including CF, Nutrien and Mosaic Co. have benefited as sanctions on exporters Russia and ally Belarus limited global supplies that were already tight.

Illinois-based CF, which operates the world’s largest nitrogen complex in Louisiana, said net earnings reached $883 million in the three months ended on March 31, compared with $151 million a year earlier (all figures US$). Net sales were $2.9 billion, up from $1 billion a year ago.

Nitrogen fertilizer is one of the most commonly used fertilizers to boost production of corn, canola and other crops.

Global inventories are “extremely tight” while demand is strong from farmers seeking to cash in on grain prices that have jumped as the Ukraine war is disrupting crop shipments from the Black Sea, CF said.

It will take at least two to three years to replenish global grains stocks after the invasion, CEO Tony Will said. Moscow calls its action in Ukraine a “special operation.”

The company said it shipped the highest quarterly volume of nitrogen by rail in North America in 10 years to meet demand and is chartering three times its typical volume of U.S.-flagged vessels to move liquid nitrogen to the U.S. coasts.

The average price for natural gas, used to make nitrogen fertilizer, was $6.48 per MMBtu in the quarter, compared with $3.22 in 2021, CF said.

— Reporting for Reuters by Tom Polansek in Chicago.

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Prices of essential crop nutrients such as potash and phosphate skyrocketed in the quarter, touching near-record levels, as sanctions imposed on major exporter Russia for its invasion of Ukraine disrupted supplies that were already tight.

Demand for fertilizer has also been strong as an inflation-induced surge in prices of major crops is driving farmers to increase production.

“Global agriculture and crop input markets are being impacted by a number of unprecedented supply disruptions that have contributed to higher commodity prices and escalated concerns for global food security,” interim CEO Ken Seitz said in a statement.

Seitz also said Saskatoon-based Nutrien could potentially expand its low-cost fertilizer production capability.

The company, however, forecast a cut in global potash shipments for the year, citing supply uncertainties from Russia and Belarus.

Nutrien expects 2022 adjusted earnings of $16.20 to $18.70 per share, compared with its previous forecast of $10.20 to $11.80 per share (all figures US$). Analysts were expecting $15.20 per share, as per Refinitiv data.

Net earnings rose to $1.39 billion, or $2.49 per share, in the quarter ended March 31 from $133 million, or 22 cents per share, a year earlier.

Excluding items, it posted a profit of $2.70 per share, but missed estimates of $2.75.

Earlier, rival Mosaic Co., the world’s largest producer of finished phosphate products, posted a more than sevenfold surge in quarterly profit that narrowly beat estimates.

Mosaic said its potash and phosphate shipments were delayed by poor rail performance, adding that rail cycle times would not likely recover to normal levels until the second half of 2022.

The company earned $2.41 per share, excluding items, while analysts were expecting $2.40.

The bottom lines for major fertilizer makers including Nutrien, Mosaic and CF Industries have been expected to benefit from recent sanctions on Russia and Belarus.

Nutrien had said in March it would ramp up its annual potash output in response to the uncertainty of supply from Eastern Europe.

However, Joel Jackson, senior analyst at BMO Capital Markets Equity Research, cautioned Monday that Nutrien may face challenges in finding the labour to ramp up that capacity.

High fertilizer prices may also eventually be partially offset by soaring natural gas prices, particularly for nitrogen-based fertilizer makers such as CF, Morningstar equity analyst Seth Goldstein said.

“For companies like Mosaic and Nutrien that are vertically integrated and mining their own potash, they should feel the cost inflation less than perhaps a CF who still needs to buy U.S. natural gas to make nitrogen.”

Analysts said Monday they would also be on the lookout for comments from fertilizer firms on demand getting hit due to higher prices. Farmers are already reacting by skimping on fertilizer use, stockpiling for a few years, or switching to manure.

— Reporting for Reuters by Ruhi Soni in Bangalore.

CLARIFICATION, May 3: Paragraph 6 rewritten by Reuters to clarify that Nutrien’s projection for reduced output was for the potash sector globally, not for the company specifically.

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Cargill, the largest privately held U.S. company, said adjusted operating profit fell to $476 million in the fiscal fourth quarter ended May 31, from $809 million a year earlier, as three of its four business units posted lower year-on-year results (all figures US$).

Trade tensions between Washington and Beijing have battered the U.S. agricultural sector as tit-for-tat tariffs have reduced commodities exports from the United States and redrawn global trade flows. Severe spring flooding across the U.S. farm belt added to the struggles.

“It was an off quarter. It wasn’t what we wanted but we’re quite optimistic about where we’re taking the company,” David Dines, Cargill’s chief financial officer said in an interview.

“When you combine the weather with the trade war, it’s just a challenging time for the industry,” he said.

Minnesota-based Cargill is the first of the major grain traders to report earnings since U.S.-China trade talks broke down and persistent rains led to the slowest U.S. spring planting season on record.

Cargill rivals Archer Daniels Midland and Bunge report quarterly results at the end of the month.

Cargill’s animal nutrition and protein segment posted a lower year-on-year profit for the third time in four quarters as poor weather disrupted U.S. Midwest cattle shipments and reduced demand for beef for outdoor grilling.

Reduced hog feed demand in China — where a deadly hog disease, African swine fever, has decimated the industry — further dampened results.

Profit for Cargill’s origination and processing business fell from an exceptionally strong fourth quarter last year as flooding across the central United States disrupted grain transportation and exports.

Also, U.S. farm product exports faced stiff headwinds as tariffs on U.S. goods imported by China, the world’s top soybean buyer and major importer of various other agricultural goods, remain in place.

The company expects to reverse some mark-to-market losses from declining soybean prices later this year as beans are processed and soy products are sold, Dines said.

Lower sweeteners and starches profits weighed on Cargill’s food ingredients and applications unit.

Cargill’s industrial and financial services segment posted stronger earnings, led by improved profit in metals, risk management and trade finance.

— Reporting for Reuters by Karl Plume in Chicago; additional reporting by Shanti S Nair and Debroop Roy in Bangalore.

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The gains in protein offset a weaker year-on-year result for Cargill’s origination and processing unit as huge global grain stocks weighed down commodity prices and minimized market volatility, limiting trading opportunities.

Cargill and rivals — including Archer Daniels Midland, Bunge and Louis Dreyfus, known as the ABCD quartet of global grain trading giants — have been trying to diversify and lift earnings amid a global grains glut that has squeezed margins and dragged down profits.

Cargill’s diversification push has centered around its proteins business, with expansions in feed production and aquaculture and divestitures of its U.S. pork business and several cattle feedlots.

The privately held company said net income rose to $973 million in its first quarter ended Aug. 31, from $852 million a year earlier (all figures US$).

Excluding one-time items, Cargill reported quarterly net income of $888 million, up from $827 million a year earlier.

Revenue came in at $27.3 billion, slightly up from the $27.1 billion it posted last year.

The company’s animal nutrition and protein segment was the largest contributor to profit in the quarter, as low beef prices fueled demand while ample beef cattle supplies boosted margins. Global poultry earnings were down slightly from the year-earlier quarter.

Cargill’s food ingredients and applications unit was the second-largest earnings contributor in the quarter, led by gains in cocoa and chocolate products and sweeteners and starches, the company said. It was the fifth straight quarter of higher year-on-year results for the segment.

Origination and processing results fell below a year ago despite good soy processing results in Brazil and China and strong exports from Brazil. Slow farmer grain sales in South America created headwinds, the company said.

Industrial and financial services results were also lower than a year ago.

— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Taenaz Shakir in Bangalore.

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Shares of the company, which owns brands such as Velveeta cheese and Heinz ketchup, were down nearly three per cent at $86.75 in after-hours trading on Wednesday (all figures US$).

U.S. sales, which account for about 70 per cent of Kraft’s total revenue, fell 3.5 per cent, mainly due to weak demand for its cheese, meats and nut products.

Canada sales fell 12.2 per cent in the first quarter ended April 1.

A muted spending environment in the U.S. coupled with changing consumer tastes toward fresh, organic food over processed food has forced the packaged food maker to launch new products and revamp its ready-to-eat meals to remove synthetic colors and preservatives.

Kraft, in January, had partnered with Oprah Winfrey to launch a new healthy line of packaged food called Mealtime Stories.

The company’s net sales fell 3.1 per cent to $6.36 billion, missing analysts’ average estimate of $6.45 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to shareholders was $893 million, or 73 cents per share, in the first quarter, compared with $896 million, or 73 cents per share, in the year-earlier period.

Excluding certain items, Kraft earned 84 cents per share, missing analysts’ average estimate of 86 cents per share.

— Reporting for Reuters by Gayathree Ganesan in Bangalore.

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Shares of the Saskatoon-based fertilizer producer rose 1.6 per cent in early New York trading, touching a three-week high.

Revenue was lower in the first quarter due to weaker prices year over year, but it still exceeded Wall Street’s expectations.

Potash prices have rebounded modestly since last year but remain low due to bloated global capacity and weakening farm incomes. Even so, PotashCorp forecast global potash demand of 61 million to 64 million tonnes this year, exceeding last year’s 60 million tonnes.

Potash said it expected full-year earnings of 45 cents to 65 cents per share, up from its prior forecast of 35 cents to 55 cents.

The company raised the lower end of its estimate for 2017 potash sales to 8.9 million tonnes from 8.7 million tonnes, keeping the upper end at 9.4 million tonnes.

“We expect improved consumption trends and nutrient affordability in key markets to support potash demand and our results through the remainder of 2017,” CEO Jochen Tilk said in a statement.

Bernstein analyst Jonas Oxgaard said earnings benefited from a lower tax rate as well as stronger sales in China, India and North America.

“(It) suggests the potash price recovery is in strong force,” he said in a note.

But Citi analyst P.J. Juvekar said it was too early to envision a major recovery as rivals bring on new potash mines through next year.

PotashCorp has nearly finished expanding its low-cost Rocanville, Sask. mine, which it says will help it weather weak crop nutrient prices.

In September, PotashCorp and rival Agrium announced plans to merge. The deal would combine PotashCorp’s fertilizer capacity, the world’s largest, and Agrium’s farm retail network, North America’s biggest.

Tilk said the companies were working through the regulatory process and still expect the deal to close in mid-2017.

Net earnings nearly doubled to $149 million, or 18 cents per share, in the quarter, beating the analysts’ average estimate of 11 cents.

Revenue fell eight per cent to $1.11 billion, despite a 13 per cent rise in potash sales volumes.

Analysts on average had expected $1.06 billion, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Swetha Gopinath in Bangalore and Rod Nickel in Winnipeg.

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The company, whose brands include Schneiders and namesake Maple Leaf, said adjusted operating earnings rose 10 per cent to $59 million in the first quarter ended March 31.

Maple Leaf, which is Canada’s biggest pork processor, is on a hunt for acquisitions in the U.S., after years spent upgrading old factories and shedding business lines.

In February, the company bought U.S.-based Lightlife Foods, a manufacturer of plant-based protein foods, for US$140 million, Maple Leaf’s first material deal since 2004.

The company said on Thursday its net earnings fell 28.8 per cent to $30.1 million, or 22 cents per share, from a year earlier, hurt by restructuring charges.

On an adjusted basis, Maple Leaf earned 33 cents per share, beating analysts’ average estimate by three cents.

The company’s sales rose 1.8 per cent to $811.2 million.

— Reporting for Reuters by Ahmed Farhatha in Bangalore.

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Maple Leaf said adjusted operating earnings in its meat products unit, the company’s primary source of income, more than doubled to $65.93 million in the third quarter ended Sept. 30.

The company’s net earnings rose to $31.83 million, or 23 cents per share, from $18.68 million, or 13 cents per share, a year earlier.

Maple Leaf recently completed a program started in 2010 to boost earnings by shutting some plants and modernizing others.

On an adjusted basis, Maple Leaf earned 32 cents per share, in line with the average analyst estimate, according to Thomson Reuters I/B/E/S.

Total sales for Canada’s biggest pork processor rose 4.1 per cent to $852.1 million, beating analysts’ average estimate of $843 million.

— Reporting for Reuters by Rod Nickel in Winnipeg and Ahmed Farhatha in Bangalore.

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