Cargill’s Family Owners Get Best Payout Since 2010
The 125 family members that control Cargill got the biggest payout since 2010
(Bloomberg) -- The 125 family members that control Cargill Inc. got the biggest payout since 2010 as the top privately held U.S. firm posted the strongest two-year performance in at least a decade, company accounts show.
The world’s No. 1 trader of agricultural commodities paid the Cargill and MacMillan families $643 million in the fiscal year that ended in May, amounting to about $5 million a person on average, according to the accounts reviewed by Bloomberg. The company pays them the equivalent of 20% of the average profit of the previous two years, compared with as much as 50% across firms in the S&P 500 index.
Cargill, which counts 14 billionaires among its ruling circle in one of the largest concentrations of wealth in any family-controlled business, declined to comment on the payout. The latest dividend is the highest since the 2010 fiscal year, when a record $728 million was distributed, data compiled by Bloomberg based on annual reports and historical bond prospectuses show.
The larger dividend is likely to help the families continue resisting the temptation of taking Cargill public or increasing the share of net income they receive. However, with each new generation -- now in the seventh -- the stake of each shareholder gets thinner. At some large family-controlled businesses, that scenario has led to pressure for a sale or initial public offering that would provide a windfall for members.
Rival agribusiness giant Bunge Ltd., for example, went public in 2001, allowing its owners to sell a large chunk of their stake. Based on the price-to-earnings ratios of its publicly traded peers, Cargill could be worth almost $50 billion.
With some 155,000 employees across 70 countries, the company was founded by William Wallace Cargill in 1865. The firm accounts for the “C” in the vaunted ABCDs of the agriculture world, along with Archer-Daniels-Midland Co., Bunge and Louis Dreyfus Co., that have dominated grain trading for centuries.
Cargill’s distribution increased from $551 million in the previous fiscal even as the company and its competitors face headwinds in the form of American President Donald Trump’s trade war with China, which has ensnared U.S.-grown agricultural products such as soybeans and altered commodity flows.
Over the past two fiscal years, the Minneapolis-based company posted a total profit of $5.66 billion, the most in a two-year period in at least a decade. Last month, it said that it was reviewing its business due to operational challenges and a slowdown in earnings. Still, Cargill’s results have been buoyed by its focus on protein, making it less reliant on trading.
To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;Javier Blas in London at jblas3@bloomberg.net
To contact the editors responsible for this story: Tina Davis at tinadavis@bloomberg.net, Pratish Narayanan
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