ADM earnings down on ethanol, European oilseeds

by Eric Schroeder
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DECATUR, ILL. — Weak ethanol and European oilseeds markets weighed on earnings at Archer Daniels Midland Co. in the third quarter. Net income in the period ended March 31 was $399 million, equal to 60c per share on the common stock, down 31% from $578 million, or 86c per share, in the third quarter of fiscal 2011. ADM’s adjusted earnings per share, which excludes the impact of LIFO, restructuring costs and other adjustments, was 78c, down 12% from a year ago.

Segment operating profit for the first quarter was $887 million, down 12% from $1,006 million in the same period a year ago.

Net sales in the first quarter were $21,155 million, up 5% from $20,077 million in the same period a year ago.

“This quarter, we delivered very good results despite difficult margin environments, particularly in ethanol and European oilseeds,” said Patricia Woertz, chairman and chief executive officer. “The strong third quarter last year set a high bar, and this quarter represents a solid performance by the team.

“Looking ahead, planting is under way in North America, and we’re encouraged by the projected corn and soybean acreage. Meanwhile, we continue to leverage our global origination, processing and transportation network to deliver products to our customers and returns to our shareholders.”

In the company’s Corn Processing segment, operating profit fell 36% to $130 million from $204 million.

Net sales and other operating income in the segment rose 15%, to $2,835 million from $2,463 million. Within the segment, sweeteners and starches profit rose 102% to $93 million while bioproducts profit decreased 77% to $23 million.

“Export demand for sweeteners remained strong, and average selling prices rose as new sweetener contracts came into effect through the quarter,” ADM said.

ADM said the decline in the bioproducts profit reflected a $14 million charge related to the closing of the company’s 30 million gallon per year ethanol dry mill at Walhalla, N.D.

ADM’s Oilseeds Processing segment profit eased 23% in the quarter, falling to $395 million from $512 million. Sales and other operating income in the segment rose 14% to $7,044 million.

The company’s Agricultural Services segment posted a 5% increase in operating profit during the third quarter of fiscal 2012, climbing to $179 million from $171 million in fiscal 2011. Sales and other operating income in the segment fell 1% to $9,825 million from $9,876 million.

The ADM Other segment posted operating income of $183 million, up 54% from $119 million, while sales and other operating income fell 8% to $1,451 million from $1,582 million.

“Cocoa results were impacted by $72 million in mark-to-market timing gains,” ADM said. “The underlying performance in cocoa remained strong, driven by good cocoa press margins. Wheat milling results, including ADM’s share of Gruma S.A.B. de C.V., were essentially flat.”

For the nine months ended March 31, net income at ADM was $939 million, or $1.41 per share, down 43% from $1,655 million, or $2.55 per share, in the same period a year ago. Net sales and other operating income increased 15% to $66,363 million from $57,806 million.

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