By Jacob Bunge
Archer Daniels Midland Co.'s first-quarter profit surged,
topping analysts' expectations, thanks to a boom in the
agricultural company's soybean-processing operations.
Plentiful supplies of the oilseed following last year's record
U.S. harvest and prompt marketing of this year's crop by South
American farmers kept ADM's processing plants humming and boosted
the division's profit by about 46%, ADM said on Tuesday.
"We feel very strongly about the year oilseeds is going to
have," said Juan Luciano, ADM's chief executive, on a post-earnings
conference call.
Soybean processors already are running near full capacity around
the world, and though demand for soybean-based products like
vegetable oil and animal feed is on the rise, processors have not
added many new plants, Mr. Luciano said.
ADM's buoyant outlook on soybeans comes as the commodities
behemoth and its top rivals in crop trading and processing,
including Cargill Inc. and Bunge Ltd., keep pace with potential
shifts in demand for oilseeds, which are crushed to produce food,
feed and fuel products.
Analysts have cited reports that China's pork industry has
ramped up hog-slaughtering rates in recent months as a potential
dent to that country's demand for soybean-based animal feed. U.S.
pork processors are ramping up production in response to
fast-expanding hog herds, as farmers move past a virus that killed
millions of baby pigs over the past two years.
ADM is adding to its own long-term bets on protein production,
Mr. Luciano said, announcing plans on Tuesday to build new feed
plants in China and Minnesota.
Chicago-based ADM reported first-quarter earnings of $493
million, or 77 cents a share, up from $267 million, or 40 cents a
share, a year earlier. Revenue fell to $17.51 billion from $20.67
billion.
Analysts had projected per-share earnings of 71 cents and
revenue of $20.58 billion.
ADM shares were down 41 cents, or 0.8%, to $49.91 in midday
trading.
ADM's oilseeds division generated $483 million in profit, up
from $330 million a year earlier. The Brazilian real's decline
versus the U.S. dollar helped encourage farmers in Brazil to sell
crops, boosting the unit's performance, Mr. Luciano said.
Profits from agricultural services, including grain trading,
climbed 37% to $194 million. Corn-processing earnings roughly
halved to $127 million, partly due to weakness in ADM's ethanol
business.
Though sliding crude-oil prices have slashed profit margins for
makers of ethanol, which is blended into gasoline, Mr. Luciano said
per-barrel profitability improved in April and U.S.
transportation-fuel demand is growing as motorists take advantage
of low gasoline prices.
ADM expects the U.S. to consume 13.8 billion to 14 billion
gallons' worth of ethanol this year, with exports totaling about
800 million gallons, Mr. Luciano said, roughly steady with last
year.
--Angela Chen contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com
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