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Archer Daniels Q4 earnings fall 25%


Archer Daniels Midland Company (ADM)(NYSE:ADM) reported Tuesday fourth quarter earnings dropped 25 per cent, a result of negative ethanol margins and weak agricultural services results.

For the quarter that ended June 30, the oilseeds, corn, wheat and cocoa processor reported profit of $284 million, or 43 cents per diluted share, down from $381 million, or 58 cents per diluted share in the fourth quarter of 2011.

Excluding items, adjusted earnings totalled 38 cents per share, attributed to lower segment operating profit offset by lower expenses. Adjusted earnings were 69 cents per share in last year’s quarter.

Analysts anticipated earnings of 60 cents per share.

Revenue edged down 0.9 per cent to $22.68 billion from $22.87 billion, but beat analyst estimates for $21.75 billion.

“In a challenging fourth quarter, solid results from our global oilseeds business, particularly in South America, were more than offset by negative U.S. ethanol margins and weaker U.S. merchandising results,” stated ADM chairman and CEO, Patricia Woertz.

The oilseeds processing unit – which processes oilseeds like soybeans, sunflower seed and canola – saw operating profit decline by $118 million to $331 million due to weaker cocoa results. Processing volumes increased 11 percent and sales rose 4.4 per cent.

At its corn processing business, the company reported operating profit of $74 million, down from $122 million last year.

Its agricultural services division posted an operating profit of $123 million from $345 million.

Overall, gross margin narrowed to 3.6 per cent from 4.8 per cent in the year-earlier period.

Fiscal 2012 dividends and share repurchases totalled nearly $1 billion.

Looking ahead, the company expects U.S. crop carryouts to be low due to drought that has reduced the potential size of U.S.
corn crop. The company said it is tracking the development of other crops in North America and Europe. The smaller South American spring harvest means that the U.S. is currently the primary global supplier of soybeans and meal.

The Decatur, Illinois-based company processes oilseeds, corn, wheat and other agricultural commodities and also makes vegetable oil, corn sweeteners and other feed ingredients.

The company currently has more than 270 processing plants, 420 crop procurement facilities and a large crop transportation network connecting its products to more than 160 countries across the globe.

Company shares were down 3.67 per cent to $26.48 on the New York Stock Exchange Tuesday.

Quick facts: Archer Daniels Midland

Price: 40.51 USD

Market: NYSE
Market Cap: $22.5 billion

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