(Dow Jones) -- Cargill Inc. said profits rose 8% in the agricultural conglomerate's latest quarter, although its top executive warned of continued tough times in agricultural markets.
The Minnesota agricultural conglomerate said net earnings rose to $459 million in the company's fiscal third quarter, up from $425 million a year earlier. Revenue fell 11% to $25.2 billion, which Cargill attributed to lower commodity prices and the U.S. dollar's gains against overseas currencies.
"With agriculture and energy markets as tough as we've seen in a long time, we're pleased with the gain in earnings achieved this quarter," said David MacLennan, Cargill's chairman and CEO.
He cautioned that low crop prices and enlarged global stockpiles of grain will continue to challenge the business. "Barring weather events, we don't anticipate a near-term improvement in market conditions for agriculture," Mr. MacLennan said.
Cargill has been streamlining its corporate structure and shifting its vast business portfolio toward higher-margin businesses in response to falling profits and shifting consumer tastes.
A global surplus of major crops has kept prices low, pushing U.S. farmers' incomes to the lowest level in more than a decade and forcing them to scrutinize spending on seeds, sprays and tractors, which is posing a challenge for Farm Belt mainstays like DuPont Co., Monsanto Co. and Deere & Co.
For grain traders like Cargill and Archer Daniels Midland Co., the multiyear decline in crop prices has slimmed margins from processing grain into products ranging from starch to fuel additives. Low prices also have muted grain-market volatility, making it tougher for Cargill's grain traders to capture profits, the company said.
Cargill said its food ingredients business, which supplies products like cocoa powder for bakers and sweeteners for beverage makers, delivered the biggest boost to profits in the latest quarter, rebounding from weak results in the prior-year period. The company said it sold less salt for deicing roads, due to the warmer North American winter, though it shifted more for food products.
The industrial-and-financial-services division lost money in the quarter, which Cargill attributed to "historic lows" in ocean freight rates and excess shipping capacity. Oversupplied crude oil markets and a slowdown in steel demand also worked against the business, the company said.
Cargill's core grain-trading division got a lift from moves by the Argentine government in December to loosen currency controls and eliminate farm export taxes, which helped offset slower grain sales by U.S. farmers who opted to store away their crops rather than sell at cut-rate prices. Cheap pork and chicken prices, as well as the U.S. dollar's strength, pushed profits lower in Cargill's meat and animal-feed business despite brisk U.S. turkey sales.