ADM earnings suffer decline on sales drop, charges

by Eric Schroeder
Share This:

DECATUR, ILL. — Earnings at Archer Daniels Midland Co. in the third quarter ended March 31 plummeted 98%, bogged down by a sharp decline in sales and one-time charges related to equity investments. Net income in the quarter ended March 31 totaled $8 million, equal to 1c per share on the common stock, down from $517 million, or 80c per share, in the same period a year ago.

The most recent quarterly results included a $132 million non-cash after-tax charge related to currency derivative losses of the company’s equity investee, Gruma S.A.B. de C.V., as well as a $97 million income tax charge related to ADM’s investment in Wilmar International Ltd.

Net sales were $14,842 million, down 21% from $18,708 million in the same period a year ago.

"While the quarterly results were adversely impacted by two significant, unusual items, our underlying performance was solid in view of the global economic conditions and the associated challenges faced by our industry," said Patricia Woertz, chairman, president and chief executive officer. "Our financial condition is strong, and we remain focused on managing risks and costs as we execute our long-term growth strategy."

Overall operating income fell 72% in the third quarter, as each of the company’s segments posted lower year-over-year results.

Operating profit in the Oilseeds Processing segment was $224 million in the third quarter, down 5% from $237 million in the same period in fiscal 2008. The company said crushing and origination results decreased $79 million for the quarter due to weaker North American crushing margins and weaker fertilizer margins in South America. Refining, packaging, biodiesel and other results, meanwhile, rose 13% in the quarter behind improved margins for edible soy proteins. For the nine months ended March 31, operating earnings were $1,053 million, up 58%.

Corn Processing operating earnings in the third quarter fell to $49 million, down 72% from $172 million in the third quarter last year. A 43% gain in sweeteners and starches was not enough to offset a $97 million loss in bioproducts for the quarter. For the nine months, operating profit was $196 million in Corn Processing, down 72%.

Agricultural Services operating profit was $121 million, down 67% from $366 million a year earlier. The loss was attributed to higher global supplies of agricultural commodities coupled with sluggish demand. Year-to-date operating profit was $1,011 million, up 11%.

The ADM Other segment suffered a loss of $140 million in the quarter, which compared with operating profit of $138 million in the same period a year ago. The segment was weighed down by a loss of $123 million in wheat, cocoa, malt and sugar, as well as by lower equity earnings from the company’s investment in Gruma. For the nine months, the segment sustained an operating loss of $15 million, which compared with income of $390 million in the same period a year ago.

Net income in the first nine months of fiscal 2009 was $1,643 million, or $2.55 per share, up 15% from $1,430 million, or $2.21, during the first nine months last year. Sales were $52,675 million, up 10%.

In New York Stock Exchange trading after ADM announced earnings, shares fell as much as 11% before closing down 8.9% at $23.84.

Comment on this Article
We welcome your thoughtful comments. Please comply with our Community rules.

The views expressed in the comments section of Baking Business News do not reflect those of Baking Business News or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.