Accounting gain, higher prices push ADM profit higher

by Staff
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DECATUR, ILL. — First-quarter earnings more than doubled at Archer Daniels Midland Co. behind an accounting gain and higher selling prices. Net income in the first quarter ended Sept. 30 was $1,051 million, equal to $1.63 per share on the common stock, up sharply from $441 million, or 68c per share, last year. The gain included a LIFO credit of $453 million, which compared with a LIFO charge of $83 million in the same quarter a year ago.

Segment operating profit for the quarter increased 48% to $1,176 million from $797 million last year. ADM said its Oilseeds Processing division’s operating profit increased 144% to $510 million on improved global crushing and origination margins, improved margins for value-added products and increased equity earnings for Asian affiliates.

The company’s Corn Processing division’s operating profit, meanwhile, fell 54% to $118 million due to sharply higher corn and energy costs only partially offset by increased sales volumes and average selling prices for sweeteners and starches, ethanol and lysine.

The company’s Agricultural Services division’s operating profit increased 87% to $428 million due to improved margins resulting from opportunities created by market volatility, global shifts in sources of grain supplies and the delayed U.S. harvest.

The "Other" division’s operating profit was up narrowly to $120 million from $106 million, reflecting improved cocoa processing volumes and margins and improved wheat processing margins.

Net sales and other operating income at ADM in the first quarter increased 65% to $21,160 million. The company attributed the gain to higher average selling prices resulting primarily from year-over-year increases in underlying commodity costs.

"This record quarter again demonstrates the ability of our people to utilize our integrated global network and financial strength to capitalize on opportunities and further affirms our business model and strategy," said Patricia A. Woertz, chairman and chief executive officer. "Our strong balance sheet and credit rating provide us with the flexibility to access the most cost-efficient credit markets. Our market acumen coupled with this financial strength enables us to recognize and promptly act upon opportunities when they arise."

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