May 4, 2011
ADM Q3 earnings increase due to strong sales growth
Archer Daniels Midland Co.''s (ADM) fiscal third-quarter profits increased 37% as the grain processing giant experienced strong progress at its oilseeds and corn processing businesses.
The grain processor and merchandiser, which was caught offguard last summer by the timing of a Russian grain export ban, began benefiting from tightening global supplies and rising prices toward the end of 2010. The company in March unveiled plans to increase its grain storage capacity amid rising production, low interest rates and an increase in the number of plants that produce corn-based alcohol. Meanwhile, US demand for high-fructose corn syrup rose at the end of last year for the first time in five years amid surging sugar prices and fewer food makers rejecting the sweetener.
For the quarter ended March 31, ADM reported a profit of US$578 million, or US$0.86 a share, up from US$421 million, or US$0.65 a share, a year earlier. The latest period included US$0.04 in inventory-related charges, while the prior-year included US$0.04 in gains.
Revenue climbed 33% to US$20.08 billion.
Analysts polled by Thomson Reuters most recently forecast earnings of US$0.86 on revenue of US$17.69 billion.
Gross margin fell to 5.8% from 5.9%.
Profits at ADM''s agricultural services division, which handles and transports grain from farm to market is also its largest segment by earnings, and it rose 3.6%.
At ADM''s oilseeds processing unit, profit was up 26% on strong growth in its crushing and origination and biodiesel businesses. However, oilseeds processing volume edged down 0.7%.
Its corn-processing business earnings nearly doubled as volume rose 13% amid increased production. Sweetener and starches operations earnings were essentially flat. Bioproducts profit more than doubled amid strong demand for value-added food and feed ingredients, especially lysine.
Shares closed Monday at US$37 and were inactive premarket. The stock is up by a third in the past year.