UPDATE: ADM Profit Falls 15% On Higher Taxes, Corn Costs
August 02 2011 - 9:59AM
Dow Jones News
Archer Daniels Midland Co.'s (ADM) fiscal fourth-quarter
earnings fell 15% on a sharply higher tax bill and increased corn
costs, even as earnings grew at most of its businesses.
The company's income taxes for the quarter nearly quadrupled to
$385 million, driven by a higher rate the grain processor and
merchandiser said was atypical. The increase was due to "several
unfavorable specific tax items and changes in the geographic mix of
earnings," ADM said in a statement.
The company's effective tax rate was 50%, compared with 19% a
year earlier.
Corn costs also curbed profits, as earnings in ADM's
corn-processing unit fell 16% despite a 15% increase in volume.
Profits from sweeteners and starches declined as higher average
selling prices and volume, led by strong export demand, were offset
by increased corn costs.
Corn futures at the Chicago Board of Trade hit an all-time
record of nearly hit $8 a bushel in early June, an increase of more
than $4.50 a bushel over the prior year.
ADM shares fell 3.9% to $29.30 in premarket trading as adjusted
earnings were well below analysts' expectations. Through Monday's
close, the stock was up 1.3% this year.
The Illinois-based company posted strong profit growth in recent
quarters as tight global grain supplies and strong demand for
agricultural commodities pushed prices higher.
ADM reported earnings growth in other business units. Its
oilseeds processing business, ADM's biggest segment, reported
operating earnings growth of 5.6% amid stronger revenue. Still,
volume declined 2%. The agricultural services segment, which
includes grain merchandising operations, saw earnings increase 8.4%
amid stronger sales. ADM said it had strong results at its North
American grain elevators and export operations.
For the quarter ended June 30, ADM reported a profit of $381
million, or 58 cents a share, down from $446 million, or 69 cents a
share, a year earlier. The latest quarter included 5 cents a share
in inventory-related credits, while the prior year included charges
of 2 cents a share. Revenue soared 45% to $22.87 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of 85 cents a share on revenue of $20.43 billion.
Gross margin fell to 4.8% from 5.9%.
-By Ian Berry and Tess Stynes, Dow Jones Newswires;
312-750-4072; ian.berry@dowjones.com; Tess.Stynes@dowjones.com
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