Archer Daniels Midland Co.'s (ADM) fiscal second-quarter
earnings surged as the agricultural giant reported stronger revenue
and impacts from a big asset write-down a year earlier.
Chairman and Chief Executive Patricia Woertz is aiming to take
the U.S. company to the heart of Asia, but she has twice been
spurned in efforts to acquire GrainCorp Ltd. (GNC.AU) of
Australia.
ADM in October launched its bid to acquire GrainCorp to gain
access to its grain storage and ports on Australia's east coast,
the beachhead for exporting grain to China and the rest of Asia.
ADM recently sold stakes in Gruma SAB (GMK, GRUMA.MX) and several
of its units for $450 million, with proceeds earmarked to pay for
the GrainCorp deal.
"We continued taking action to improve underperforming
businesses," Ms. Woertz said Tuesday. "As part of our ongoing
portfolio management, we sold $570 million of noncore investments.
And through a companywide focus, we unlocked more than $1 billion
in working cash."
In the U.S., ADM has been under pressure from high corn prices
caused by last year's drought in the Midwest, while sluggish
gasoline demand has further pressured ethanol margins.
For the quarter ended Dec. 31, Archer Daniels reported a profit
of $510 million, or 77 cents a share, up from $80 million, or 12
cents a share, a year earlier. Excluding inventory-related gains, a
year-earlier asset write-down and other items, adjusted earnings
were up at 60 cents from 51 cents. Revenue increased 6.9% to $24.92
billion.
Analysts polled by Thomson Reuters most recently projected
earnings of 58 cents a share on revenue of $21.22 billion.
Gross margin rose to 4% from 3.5%.
Adjusted earnings in ADM's corn-processing segment returned to
the black absent a year-earlier asset write-down and as results
improved at its sweeteners-and-starches business, which benefited
from tight supplies and higher corn costs that supported price
increases. However, ethanol margins remained negative, weighing on
results.
Profit in ADM's agricultural-services segment, which includes
grain storage and exports, reported revenue growth of 32%.
Oilseeds-processing-segment earnings soared 97%, as stronger
profits at ADM's crushing and origination business helped offset
declines in its biodiesel segment.
Shares closed Monday at $28.44 and were inactive premarket.
Write to Tess Stynes at tess.stynes@dowjones.com
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