Archer Daniels Midland Co.'s (ADM) fiscal second-quarter
earnings plummeted 89% as the agribusiness giant posted a large
writedown related to an Iowa facility and saw weakness in three of
its major segments, though overall revenue rose.
"It was a tough quarter," Chief Executive Patricia Woertz said.
"The operating environment was challenging. Ongoing weakness in
global oilseeds margins, lower results in corn and poor
international merchandising results hurt our second-quarter
profits."
The Decatur, Ill., grain trader and processor said its
agricultural services division, which handles grain from farm to
end-user, reported 63% lower operating profit.
The oilseeds processing segment's profit fell 22% amid continued
weakness in global oilseed crushing margins, particularly in
Europe, while processing volume grew 4.6%. The corn-processing
business swung to a loss of $133 million, due to a $339 million
writedown related to an Iowa facility, from a year-earlier profit
of $399 million, as volume was up 6.6%.
Earlier this month, ADM said it would cut 1,000 jobs, or 3% of
its work force, highlighting the challenges faced by the
agribusiness sector as market volatility cuts into trading profits.
The layoffs, the company has said, are expected to save about $100
million annually and help boost its international
competitiveness.
For the quarter ended Dec. 31, the company posted a profit of
$80 million, or 12 cents a share, from $732 million, or $1.14 a
share, a year earlier. Revenue increased 11% to $23.31 billion.
Analysts surveyed by Thomson Reuters expected earnings of 76
cents on revenue of $22.82 billion.
Adjusted earnings excluding an accounting method called LIFO and
other items fell to 51 cents from $1.20.
Gross margin slid to 3.5% from 5.9%.
Shares closed Monday at $29.71 and were inactive premarket. The
stock is up 2.7% over the past three months.
-By Ben Fox Rubin, Dow Jones Newswires; 212-416-3108; ben.rubin@dowjones.com