ADM year profits up on good corn, oilseed results
by increased demand and higher prices for its sweetener and starch
The US firm yesterday announced that net earnings for its final quarter more than doubled, pushing up earnings for the year ended June 30 2006 by 26 percent to $1.3bn.
And according to ADM's president and chief executive officer Patricia Woertz, the company is well positioned to capitalize on opportunities for continued growth.
Indeed, new developments for the company announced in the fourth quarter included plans for a new cocoa plant in Hazleton, Pennsylvania, as well as ethanol expansion in Iowa and the expansion of its oil refinery in Hamburg, Germany.
The company's segment operating profit was up 82 percent for the quarter and 33 percent for the year, to reach a total of $2bn.
Net sales, however, saw a much more moderate increase of just 2 percent to $37bn, compared to $36bn last year.
Corn processing results were up on the back of increased starch and sweetener selling prices and volumes, while lower net corn costs were offset by higher energy costs. Operating profit for the firm's starch and sweetener business increased 59 percent to $432m
ADM's oilseed processing business also recorded a strong performance on the back of improved market conditions in all markets, with operating profit rising 73 percent to $598m.
The increased profit from this segment comes just a week after competitor Bunge reported a sharp fall in profit after farmers' protests in Brazil disrupted its oilseed processing business.
But not everything was positive for ADM either. A weak performance from the company's natural health and nutrition, wheat milling and cocoa operations resulted in a $105m decline in operating profit in its food and feed business for the year to $159m.
The company has also been hit by an internal scandal, after a number of its employees improperly graded some of its grain export shipments.
As a result of the violations, the company fired three of its employees and disciplined others.
"Our internal review indicates that sales to only one customer were involved where these improper actions occurred. We are in the process of notifying this customer," said the firm in a statement.
ADM would not respond to additional questions regarding the matter.