ADM posts modest increases in 'challenging' Q3
increase in income, with a strong performance from its corn
processing segment boosting flagging profits in other divisions.
The agricultural giant yesterday revealed net earnings for the quarter ended March 31 2007 of $363m, up 4 percent from last year's $348m. However, this figure also included a gain of $33m from the sale of the firm's Arkady food ingredient business. Operating profits for the company's oilseed processing and agricultural services segments decreased $8m and $38m respectively. But the sale of Arkady together with stronger corn processing results lifted total operating profits 8 percent to $593m from $549m last year. According to ADM's chairman and chief executive officer Patricia Woertz, the firm "performed well in a challenging quarter". "We are particularly pleased with continued strong performance in our corn processing segment. Our results also benefited from actions to strategically align our portfolio and our outlook on future opportunities remains quite strong," she said. The firm said results from its corn processing segment benefited due to lower operating costs and increased starch, sweetener and ethanol prices, which partially offset increased corn costs. Operating profits in the segment increased $33m for the quarter, to reach $252m. Oilseed processing operating profits fell to $169m from $177m last year, on reduced softseed and biodiesel processing margins. Agricultural services operating profits decreased to $41m from $79m last year due to lower global merchandising and handling results. Other segment operating profit increased $57m to $132m for the quarter. In November, ADM announced a global growth strategy designed to boost its position in agricultural processing, including expansion in its cocoa processing business. The move was an attempt to "capitalize on the exceptional opportunity ahead", as global demand increases for both food and fuel. The firm identified three strategic areas that it said offer the highest potential for significant, value-added growth: expansion of the geographic scope of its core model, diversification of its feedstocks and growth of its BioEnergy business. Key to the growth drive will be technology and innovation.