viewArcher Daniels Midland

Archer Daniels Q1 earnings miss Street estimates


Archer Daniels Midland Co's (NYSE:ADM) third-quarter earnings missed analyst estimates amid weak oilseed processing margins and tight US corn supplies.

For the three months ended September 30, the Decatur, Illinois-based agriculture company posted net income of $460 million, or $0.68 per share, up 33 percent from $345 million, or $0.54 per share, a year ago. Adjusted for certain one-time items, earnings were only $0.58 per share.

Revenues rose to $21.9 billion, up little more than 30 percent, from $16.8 billion in the same period last year. Costs, however, also rose to $20.9 billion, up over 31 percent.

Analysts polled by Bloomberg Businessweek had expected earnings of 66-cents per share, on $19.0 billion in sales.

Archer Daniels CEO Patricia Woertz said: "The first quarter presented a difficult and challenging market environment."

"Margin conditions in our global oilseeds segment were generally weak, and net corn costs were high. We offset some of these pressures with good management of our commodity positions and by capturing opportunities through our broad and diverse portfolio."

During the first quarter, total processing volumes rose two percent to 15.01 million tonnes. The company processed 7.02 million tonnes of oilseeds, down about one percent. Corn processing increased five percent to 6.1 million tonnes, while wheat and cocoa processing was flat at 1.9 million tonnes.

However, though revenues from oilseed processing increased 37 percent to $8.3 billion, profits declined $87 million due to a "challenging global oilseed crushing environment," the company said.

Still, its diverse portfolio helped to partially mitigate this weakness. During the quarter, it purchased two soybean processing facilities in India, expanding its presence in the growing oilseeds market there.

Net corn costs more than doubled from the year-ago period, Archer Daniels said, and despite a 53 percent rise in revenues, to $3.3 billion, profits fell 48 percent.

Other businesses boosted profits by $71 million, as cocoa press margins improved. Archer Daniels' agriculture services business posted a $112 million rise in profits, on the strong recovery of Black Sea exports, it said.

In other news, the company repurchased 8.6 million shares, for a total of $240 million.

In New York, shares of the company fell 7.75 percent to $27.99, as of 11:36 am EDT.

Quick facts: Archer Daniels Midland

Price: 40.51 USD

Market: NYSE
Market Cap: $22.5 billion

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