Minnetonka's Cargill pays record dividend to shareholders

The largest privately held company in the U.S. outperforming it's competition

The WCCO Morning News with Dave Lee
September 14, 2018 - 11:06 am

Spencer Tirey / Stringer / Getty Images

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This week, Minnetonka-based Cargill announced the payment of a record dividend to its shareholders, 90% of whom are still family members descended from the Cargill-MacMillan families that have controlled the company since its founding in 1865. 

Around 100 family members still collect dividends from the agribusiness titan.  The payments were up 29% from previous year. Cargill’s chairman and chief executive officer David MacLennan and the board have authorized a dividend payment of $551 million.  That payment comes out of an estimated $3 billion in operating profits for this and last year. 

Cargill is the largest privately held US Company by revenue.  Because it is private, it does not have the same quarterly earnings pressure that many similarly sized public companies have.

Incidentally, if Cargill were a public company it would be about 15th on the Fortune 500 list, about the size of AT&T. 

These numbers are a rare glimpse into the performance of Cargill under MacLennan who took over in 2013, and he pledged to improve the company’s profitability. 

Paul Vaaler of the University of Minnesota’s Carlson School told WCCO, “Things have been going very well.  They have a very conservative approach to the way they finance the company.  It means not just good performance in the past, but really great expectations going forward”.

Cargill's dividend payment policy is decidedly conservative so that the company can conserve capital to make bigger corporate moves like acquisitions.  Cargill has been doing that under MacLennan and his predecessor, Greg Page. 

In a statement from Cargill, the Company said:

“Our strong results show we are creating the connections the world needs for vibrant food and agriculture both today and tomorrow.  Cargill has always moved food from where it is produced to where it is needed. Today, we are pioneering new capabilities and partnerships to invest for the future. We are innovating alongside our customers to develop healthy, delicious products made the way consumers want. We are working with farmers and others to implement sustainable agricultural practices. And we are standing up for inclusive global trade that lets food move freely.”

“Essentially, the last eight years have seen Cargill divest from many agriculture derivative businesses --Black River Asset Management-- and invest in core businesses like (US) beef as well as new businesses like aqua-culture”, said Vaaler.  “Cargill makes money by buying new businesses, and then not just running them but learning how the broader industry works.  They’ve done well.”

Cargill has done well compared to other agri-business players like Dreyfus or Bunge Brothers, and has done well recently compared to US farmers, many of whom are losing money due to the current trade wars and tariffs on soybeans and hogs. 

Added Vaaler, “Cargill makes money on market volatility and there has been a lot of that recently.”