(Bloomberg) — Cargill Inc. is streamlining its operations after missing profit targets, the first big shakeup Chief Executive Officer Brian Sikes is implementing since taking the helm of the world’s largest crop trader.
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The largest closely held company in the US will reduce the number of business units to three from five as a part of its 2030 strategy, according to people familiar with the matter, who asked not to be identified because the information is private. Less than a third of Cargill’s businesses reached their earnings goal in fiscal 2024, the people said.
The changes, which also include moves at the executive level, come as ample crop supplies have squeezed profits for agricultural commodities traders. Rivals Archer-Daniels-Midland Co. and Bunge Global SA — which make up the so-called ABCDs of global agriculture commodity trading alongside Louis Dreyfus Co. — recently reported shrinking earnings.
For Cargill, the squeeze in margins was also compounded by the smallest American cattle herd in seven decades. The trading giant had spent much of the past decade turning itself into the US’s third-largest beef processor — a bet that paid off during the leadership of former CEO David MacLennan but that was just starting to sour when Sikes took over in January 2023.
“As we look to the future, we have laid out a clear plan to evolve and strengthen our portfolio to take advantage of compelling trends in front of us,” Cargill said in a statement.
Cargill didn’t specifically address the restructuring, which was first reported by Reuters, but acknowledged the company announced a new strategy. The company, which stopped releasing its results publicly during the pandemic, is also paying smaller bonuses as a result of the missed targets, according to two people.
Minnesota-based Cargill will shrink its divisions to just three: food; ag and trading; and a specialized portfolio, according to the people. It previously had five enterprises: agricultural supply chain; protein and salt; animal nutrition and health; food and bioindustrial; and financial services and metals.
Jon Nash, who now leads Cargill’s protein and salt enterprise, will head up the food division, the people said. Roger Watchorn, who heads the agricultural supply chain, will helm ag and trading, while David Webster, whose current duties include chief risk officer, will lead the specialized portfolio, according to the people.
Cargill last month cut some 200 tech jobs in various locations, including outside the US, one person said. It also announced in June it was building a separate technology hub in Atlanta, where it plans to hire some 400 workers in different roles than the ones eliminate.
“To deliver for our customers and the future of food and ag, we are building new digital technology and data capabilities,” the company said in a separate statement last month. “This means eliminating some roles across several locations.”
Cargill also halted steel trading in China after a slowdown in activity.
(Updates with time frame in second paragraph, tech job cuts in ninth.)
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