By Kristin Jones
Archer Daniels Midland Co.'s (ADM) first-quarter earnings fell
33% as the agricultural giant continued to be hurt by the 2012
drought in the Midwest.
"As expected, this was a challenging quarter, with agricultural
services negatively impacted by the ongoing effects of last
summer's U.S. drought," Chief Executive Patricia Woertz said
Wednesday. "In oilseeds, our earnings were reduced by challenges in
Brazil and depressed margins in cocoa."
Profit from ADM's agricultural-services segment, which includes
grain storage and exports, declined 42%, while the
oilseeds-processing segment reported an income decline of 42%.
Ms. Woertz added, however, that the ethanol business improved as
declining inventories supported overall margins. Operating profit
in ADM's corn-processing segment rose 15%.
ADM's corn-processing segment has been under pressure from high
corn prices caused by last year's drought in the Midwest, while
sluggish gasoline demand had pressured ethanol margins.
Overall for the latest quarter, Archer Daniels reported a profit
of $269 million, or 41 cents a share, down from $399 million, or 60
cents a share, a year earlier. Excluding a $25 million provision
expected in relation to a foreign bribery investigation, earnings
were down at 48 cents a share from 78 cents. Revenue increased 2.7%
to $21.73 billion.
Analysts polled by Thomson Reuters were recently projecting
per-share earnings of 51 cents a share on revenue of $21.33
billion.
Gross margin narrowed to 3.5% from 4.8%.
The company last week moved a step closer to a long-coveted
acquisition, when Australia's GrainCorp Ltd. (GNC.AU) agreed to a
sweetened $3 billion takeover deal after a six-month pursuit.
Buying GrainCorp would give the U.S. grain trader and processor a
crucial foothold for exporting grain to China and the rest of Asia,
a growth engine in the recent global commodities boom.
Shares fell 1.1% after hours to $33.53. Through the close, the
stock was up 23% since the start of the year.
Write to Kristin Jones at kristin.jones@dowjones.com
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