Archer Daniels Midland Co said on Monday its quarterly profit more than doubled, largely due to one-time gains of more than $600 million, though its processing businesses were hurt by a drop in ethanol sales volume and declining margins in some lines.
ADM results have been boosted in the past year by demand for alternative fuels made from crops. But higher corn costs and lower ethanol volume cut profit in its corn-processing business during the latest quarter, while oilseed processing profit was hurt by lower European rapeseed and biodiesel margins, the company said.
Still, quarterly earnings excluding one-time items beat analysts' estimates, and ADM shares rose more than 3 percent in premarket electronic trading. ADM said earnings rose to $954.8 million, or $1.47 per share, in the fiscal fourth quarter ended June 30, from $410.3 million, or 62 cents per share, a year earlier.
The latest results included after-tax gains on asset sales of $616 million, including $440 million from the exchange of stakes in Chinese joint ventures for shares in Wilmar International Ltd, the largest agriculture processing business in Asia. Excluding one-time items, Reuters Estimates computed earnings at 64 cents a share, compared with analysts' average forecast of 59 cents. ADM was not immediately available to comment on those figures.
Quarterly sales and other operating income rose 28 percent to $12.21 billion. Corn-processing profit fell 15.7 percent to $241 million due to higher prices and lower sales volume. "There's just a lot of competition in this space," Ann Gilpin, a Morningstar food analyst, said. She also said ADM has little pricing power in what it pays for raw materials or in what it charges customers.
Oilseed-processing profit fell 24.6 percent, excluding the gain on the asset exchange, due to falling European rapeseed and biodiesel margins, as well as the inclusion of $27 million in Brazilian transactional tax credits a year earlier.
The company's agricultural services profit rose to $241 million from $88 million a year earlier, due largely to a one-time gain from the sale of the company's interest in Agricore United. ADM shares rose to $35.39 in premarket electronic trading from a Friday close at $34.05 on the New York Stock Exchange. Through Friday, ADM shares had risen 6.5 percent this year, compared with a 2.9 percent rise in the Dow Jones US food producers index.
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