DOW JONES NEWSWIRES
Archer Daniels Midland Co.'s (ADM) fiscal second-quarter net
income climbed 24% amid strong results in the agribusiness giant's
oilseeds-processing and agricultural services, though profits
plunged in its corn-processing business.
Shares were up 2.6% at $28.20 in recent premarket trading.
Archer Daniels cited a "significant decline" in ethanol margins
amid sharply higher corn prices, on a year-to-year basis, and
increased manufacturing costs.
The economic slowdown and retreat in global commodity and energy
prices from their peaks last summer, have led some companies in
agribusiness to lower expectations including Bunge Ltd. (BG), the
world's largest oilseed processor, and Corn Products International
Inc. (CPO).
Meanwhile, Archer Daniels has a more diverse portfolio and less
exposure to the more volatile fertilizer markets. The company in
November said was looking for other opportunities to expand its
biofuels business in Brazil after announcing plans to enter the
country's ethanol market. Archer Daniels had seen earnings boosted
last year by its expanding biofuel footprint, though the ethanol
economics in the U.S. have deteriorated.
For the quarter ended Dec. 31, the world's largest grain
processor by revenue and one of the largest producers of ethanol,
posted net income of $585 billion, or 91 cents a share, compared
with $473 million, or 73 cents, year earlier.
Revenue edged up 1.2% to $16.67 billion as higher selling
prices, primarily due to year-over-year increases in commodity
costs, were offset by decreased sales volumes.
Analysts polled by Thomson Reuters expected earnings of 68 cents
a share on revenue of $16.97 billion.
Gross margin climbed to 7.27% from 5.75%.
ADM's oilseeds-processing arm posted a profit increase of 46%
due to improved results in all geographic regions, excluding South
American fertilizer. Earnings at agricultural services were up 47%
amid improved merchandising and handling. Profit in the
corn-processing segment plunged 89% as amid a "significant decline"
in ethanol margins due to sharply higher corn and increased
manufacturing costs, lower selling prices and inventory
write-downs.
Shares closed Monday at $27.50 and weren't active in premarket
trading. The stock has fallen by 44% since reaching a 52-week high
of $48.95 last April.
-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310;
shirleen.dorman@dowjones.com
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