ADM earnings fall 83% in Q4, 5% in full year

by Bakingbusiness Staff
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DECATUR, ILL. — Net earnings at Archer Daniels Midland Co. in the fiscal year ended June 30 fell 5%, weighed down by higher corn costs, lower average selling prices and weaker demand. Net income in the year totaled $1,707 million, equal to $2.65 per share on the common stock, down from $1,802 million, or $2.79 per share, in fiscal 2008.

Net sales were $69,207 million, down 1% from $69,816 million in the same period a year ago.

For the fourth quarter, net income plummeted 83% to $64 million, or 10c per share, from $372 million, or 58c per share, in the same period a year ago. Net sales fell 24% to $16,532 million.

"In the fourth quarter, we felt the impact of the global economic downturn, as we concluded a year of good performance overall," said Patricia Woertz, chairman, president and chief executive officer. "In this downturn, we used our strong balance sheet and cash flow to make strategic investments to build long-term value. As we look ahead, we see signs of improving demand in the various food, feed and fuel markets we serve. We remain financially strong and well positioned to capture value as global markets recover."

Overall operating income fell 73% in the fourth quarter and 29% in the full year, as most of the company’s segments posted lower year-over-year results.

The exception was the Oilseeds Processing segment, where operating profit was $1,280 million in fiscal 2009, up 23% from $1,040 million in fiscal 2008. The improvement included a $116 million gain related to the company’s equity interest in Wilmar International Ltd. ADM realized an $84 million gain during the year in refining, packaging, biodiesel and other results due to increased biodiesel sales volumes in South America, increased average margins for value-added products and asset abandonment charges. The remaining $40 million gain reflected better global crushing margins.

Corn Processing operating earnings in fiscal 2009 fell to $185 million, down 81% from $961 million in fiscal 2008. For the full year, sweeteners and starches operating profit fell $57 million to $500 million due to higher net corn costs only partially offset by higher average sweetener selling prices. Bioproducts, meanwhile, plunged $719 million year-over-year as ethanol and lysine margins declined significantly behind higher net corn costs and lower average selling prices.

Agricultural Services operating profit was $994 million, down 2% from $1,017 million a year earlier. The loss was attributed to a year-over-year decline of $41 million in merchandising and handling operations, which posted an operating loss of $29 million during the fourth quarter of fiscal 2009.

The ADM Other segment suffered a loss of $6 million in fiscal 2009, which compared with operating profit of $423 million in fiscal 2008. The segment was weighed down by equity losses from the company’s investment in Gruma, partially offset by better cocoa processing and wheat processing margins. Financial operating profit fell $263 million year-over-year during the year because of losses on managed fund investments, increased captive insurance loss provisions and decreased interest income of the company’s brokerage services business.

Shares of ADM fell 84c, or 2.8%, in pre-market activity.

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