MERRIAM, KANSAS, US — Seaboard Corp. posted operating income of $61 million in its Commodity Trading and Milling (CT&M) segment during the fiscal year ended Dec. 31, 2021, down 48% from $118 million in fiscal 2020 and compared with $62 million in fiscal 2019.
Seaboard said the decrease in operating income primarily reflected derivative contract losses of $22 million related to mark-to-market adjustments, $18 million of goodwill and property, plant and equipment impairment charges related to plans to dispose of immaterial businesses, and higher selling, general and administrative costs.
“Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which this segment operates, the volatility in the commodity markets and the ongoing impacts of the COVID-19 pandemic, including variants, management is unable to predict sales and operating results for this segment for future periods,” Seaboard noted in a Feb. 15 filing with the US Securities and Exchange Commission. “However, management anticipates positive operating income for this segment in 2022, excluding the effects of market to market derivative contracts.”
Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income in the segment would have been $68 million.
Net sales for the segment during fiscal 2021 totaled $5.15 billion, up 29% from $3.99 billion in fiscal 2020. The increase primarily reflected higher volumes of certain commodities for third-party customers, including sales from a business acquired in October 2019, and higher corn, soybean and other commodity prices, partially offset by lower volumes to affiliates, Seaboard said.
During fiscal 2021, Seaboard said its CT&M segment increased its ownership in a feed manufacturer and hog producer in Ecuador to 80% from 50%, obtaining control of the equity. Total consideration for the purchase price of the additional ownership interest included approximately $7 million of cash paid, net of cash acquired and Seaboard’s previously held equity interest and pre-existing affiliate trade receivables remeasured at their acquisition date fair values, the company noted.
In the SEC filing, Seaboard said it invested $460 million in property, plant and equipment in fiscal 2021, of which $343 million was in the Pork segment, $44 million in the Marine segment and $43 million in the Power segment. For 2022, Seaboard said management has budgeted capital expenditures totaling approximately $700 million, mostly in the Pork and Marine segments.
Overall, Seaboard in fiscal 2021 posted net earnings of $570 million, equal to $490.36 per share on the common stock, up 101% from $283 million, or $244.21 per share, in the same period a year ago. Net sales were $9.23 billion in fiscal 2021, up 30% from $7.13 billion in the same period a year ago.