--Revenue, core earnings slip as 2012 drought leads to lower
volumes
--Drought hurt company's ability to procure oilseed, grain for
processing
--Record U.S. corn harvest, rising soybean output will boost
agricultural-services unit
By Tony C. Dreibus and Nathalie Tadena
Archer Daniels Midland Co. (ADM) on Tuesday said its
third-quarter earnings more than doubled, as an accounting credit
boosted the U.S. grain processor's results. But revenue and core
earnings slipped, as ADM's agricultural-services segment was hurt
by lower U.S. volumes.
ADM reported a profit of $476 million, or 72 cents a share, up
from $182 million, or 28 cents a share, a year earlier. Total
revenue edged down 1.9% to $21.39 billion.
Adjusted earnings, which exclude the accounting credit and other
items, fell to 46 cents a share from 53 cents a share a year
earlier, the company said.
Analysts polled by Thomson Reuters most recently projected
per-share earnings of 47 cents and revenue of $20.62 billion.
ADM, along with other grain traders and processors, struggled to
secure soybean and corn supplies in the wake of last year's
historic U.S. drought. Oilseed processing in the quarter ended
Sept. 30 fell 3.6%, and corn volume declined 7.8%, the Decatur,
Ill., company said.
The Department of Agriculture expects U.S. corn production to
jump to a record 13.8 billion bushels this year, and soybean output
is seen rising 4.4%, refilling inventories and improving the
performance of ADM's grain-handling, transportation and processing
businesses, Chief Operating Officer Juan Luciano said during a
conference call with investors. Last year's drought led to
historically low U.S. supplies of corn and soybeans earlier this
year.
"As U.S. crop supply dwindled, July and August exports from the
Gulf of Mexico were seasonably low," Mr. Luciano said. "As the
large harvest began to arrive in September, exports rose to
higher-than-average levels. Our international merchandising team
had a challenging quarter."
After adjustments for impairment charges, ADM's
agricultural-services profit fell by $152 million from last year,
as it was hurt by declining U.S. exports. Merchandising and
handling earnings fell to $4 million from $104 million, the company
said.
Oilseeds-processing profits jumped 7.4% to $361 million, ADM
said. Despite tight crop supplies, ADM said its North America
oilseed-crushing business had good capacity utilization amid strong
foreign and domestic protein-meal demand.
ADM is awaiting full regulatory approval for its planned A$3.4
billion takeover of GrainCorp Ltd. (GNC.AU), Australia's largest
grain company, which accepted the offer in April.
The company has received approval from South Africa, Japan, the
European Commission and South Korea to go forward with the
acquisition, Mr. Luciano said. Australia is expected to make a
decision by mid-December on whether to approve the deal, leaving
China as the only holdout, he said. ADM wants to close the deal by
the end of the first quarter of 2014, Mr. Luciano said.
ADM is bullish on its ethanol unit, which had struggled for
several quarters, Mr. Luciano said. Corn processing profits more
than doubled in the latest period to $159 million on improved
results from ethanol. Expansion of so-called flex-fuel vehicles
that run on a blend of 85% ethanol and 15% gasoline, along with
increased overseas demand, will continue to boost ADM's ethanol
business, Mr. Luciano said.
"Ethanol margins remain positive," he said. "There will be
continued ethanol margin volatility, but with the expansion of E85
and exports, we remain confident in our ethanol business," he
said.
ADM shares recently rose 4% to $41.28. The stock is up 48% this
year.
Write to Tony C. Dreibus at tony.dreibus@wsj.com and Nathalie
Tadena at nathalie.tadena@wsj.com
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