ADM profit climbs 42% in third quarter

by FoodBusinessNews.net Staff
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DECATUR, ILL. — Boosted by a dramatic increase in profits in its ag services division, Archer Daniels Midland Co. posted overall third-quarter net income of $517 million, equal to 80c per share on the common stock, up 42% from $363 million, or 56c per share, in the same period a year ago.

Segment operating profit for the quarter ended March 31 increased 54% to $913 million from $593 million last year. ADM said its Oilseeds Processing division’s operating profit increased on improved global protein and oil demand, while its Corn Processing division’s operating profit fell due to higher net corn costs. The company’s Agricultural Services division’s operating profit soared behind volatile market conditions, which ADM said "provided exceptional merchandising opportunities."

Net sales and other operating income climbed 64% to $18,708,000 from $11,381,000. The company said selling prices increased due to sharp rises in commodity prices.

ADM said its Oilseeds Processing division’s operating profit increased $52 million to $237 million from $185 million last year due to strong global demand for protein meal and vegetable oil. Crushing and origination results increased $78 million for the quarter and $117 million for the first nine months, due principally to improved processing margins in North and South America and increased worldwide crushing volumes. Refining, packaging and biodiesel results decreased $16 million in the quarter, principally from weaker biodiesel margins in Europe.

Corn Processing operating profit decreased $79 million in the quarter to $172 million from $251 million last year. Sweeteners and Starches operating profit fell $34 million to $98 million, while Bioproducts results declined $45 million to $74 million. Higher net corn and manufacturing costs, especially energy, contributed to the declines.

The Agricultural Services division’s results increased $320 million to $341 million, due primarily to continuing enhanced merchandising and handling margins caused by the volatile global grain markets and favorable risk management results. Transportation results fell $16 million behind higher operating costs, mainly fuel.

"Other" operating profit rose $27 million for the third quarter, as wheat, cocoa and malt operations improved $8 million. Financial profit, meanwhile, moved up $19 million to $48 million in the third quarter.

For the first nine months of fiscal 2008, net earnings rose 18% to $1,430 million, or $2.21 per share, on a sales gain of 51%. Segment operating profit improved 33% in the first nine months to $2,665 million.

"ADM’s third-quarter performance demonstrates the ability of our balanced operations, global network and solid balance sheet to deliver strong results amid fluid markets," said Patricia A. Woertz, chairman and chief executive officer. "Volatility in commodity markets presented unprecedented opportunities. Once again, our team leveraged our financial flexibility and global asset base to capture those opportunities to deliver shareholder value."

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