ADM: profits fall for soy operations
quarterly earnings doubled due to payments from an antitrust suit,
but profits from its core soybean and corn processing operations
Agribusiness giant Archer Daniels Midland (ADM) on Wednesday said quarterly earnings doubled due to payments from an antitrust suit, but profits from its core soybean and corn processing operations fell, reports Reuters.
ADM, one of the world's largest processors of soybeans, corn, wheat and cocoa, said earnings in its fiscal fourth quarter ended June 30 rose to $112.27 million (€112.3m), or 17 cents per share, from $56.1 million, or 8 cents a share, a year ago.
ADM shares tumbled by as much as 11 per cent early Wednesday as earnings before one-time items fell short of analysts' estimates, but the shares recovered later to trade up 27 cents to $11.45 on the New York Stock Exchange.
ADM is the second of the three big US agribusiness companies to report increased earnings this quarter. The food processor, Bunge, on Monday said its quarterly earnings more than doubled. At the same time the company announced its intention to purchase French oil company Cereol, making it the world's top soybean processor. The third giant, privately held Cargill, will report its earnings next month.
Operating profits from ADM's oilseed and corn processing operations were down 20 per cent to $113.7 million from $141.4 million last year.
ADM's oilseed processing operations benefited from economic unrest in South America earlier this year as buyers looked to the US for exports of soybeans and soybean meal and oil.
But hot, dry weather across the US Midwest Corn Belt this summer has caused concerns about the developing corn and soybean crops and pushed prices for those commodities higher over the past month. As a result, soybean crush margins, the profit from crushing soybeans into meal and oil, have suffered.
"We expect the challenging environment of the fourth quarter to continue as weather concerns dominate many of our markets," ADM Chairman and Chief Executive G. Allen Andreas said.
ADM's corn processing operations also faced concerns from a recently affirmed 20 per cent Mexican tax on soft drinks using corn sweetener and a 148,000-tonne quota for importing US corn syrup into the country.
ADM's fourth quarter per-share earnings included a 9-cent gain from partial settlement of claims in a vitamin antitrust litigation, a 4-cent tax credit and an 8-cent charge from writedown of some assets.
Factoring out those items, the company would have earned 12 cents per share. Analysts forecast earnings of 17 cents to 20 cents per share, according to Thomson First Call.
ADM's quarterly sales rose 32 per cent to $7.07 billion from $5.35 billion, and total operating profit rose 8 percent to $223.3 million from $206.6 million.
The company reported yearly earnings of $511.1 million, or 78 cents per share, for the year ended June 30, up from $383.3 million, or 58 cents a share, in 2001.