BG Bunge Global SA

Archer Daniels Midland Company (ADM) reported robust third-quarter 2011 results. Net income for the reported quarter was $578.0 million or 86 cents per share compared with $421.0 million or 65 cents per share in the year-ago quarter. Quarterly earnings also outpaced the Zacks Consensus Estimate by a penny.

The robust quarterly result was primarily attributable to increased segmental profit, partially offset by negative discrepancy from changes in Last-In-First-Out (LIFO) inventory valuations caused by higher agricultural commodity prices.

Quarterly Details

Archer Daniels' quarterly net sales increased 32.6% year over year to $20,077.0 million, beating the Zacks Consensus Estimate of $17,279.0 million. The growth in net sales was mainly attributable to a robust jump of 37.6% in Agricultural Services to $9,340.0 million, a 30.6% rise in Oilseeds Processing revenues to $6,642.0 million and an increase of 28.2% in Corn Processing revenues to $2,513.0 million.

Total segment operating profit for Archer Daniels increased to $1,006.0 million from $696.0 million in the prior-year quarter. Operating profit for Agricultural Services segment grew 3.6% to $171.0 million from $165 million in the year-ago period, reflecting strong results from global merchandising operations and record export volumes from the United States, partially offset by significant volatility in agricultural commodity prices, regional instability in Middle East and North Africa and earthquake and tsunami in Japan.

Archer Daniels' Corn Processing segment's operating profit climbed to $204.0 million from $104.0 million last year. The increase was primarily attributed to a significant improvement in bio-products performance, stemming from better margins of ethanol and lysine. Moreover, processing volume increased by 13%. However, growth in the segment operating income was partially offset by higher net corn costs.

Archer Daniels' Oilseeds Processing segment recorded a quarterly operating profit of $512.0 million compared with an operating profit of $405.0 million in the year-ago period. The increase was primarily attributable to better performance in North America and a favorable mark-to-market timing effect in Europe, partially offset by a weak performance in Asia. Operating profit from the Other business segment came in at $119.0 million compared with an operating profit of $22.0 million in the year-ago quarter.

The long-term debt-to-capitalization ratio was 33.8% compared with a long-term debt-to-capitalization ratio of 32.9% in the prior-year quarter.

Archer Daniels, which competes with Bunge Limited (BG) and Corn Products International Inc. (CPO), currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock. Besides, the company retains a long-term Neutral recommendation.

 
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