ADM Profit Falls 60% on Weak Ethanol Demand, Drought
CEDAR RAPIDS, Iowa - Archer Daniels Midland on Tuesday reported a 60 percent drop in its first-quarter profit due to weaker global demand for ethanol, the impact of the drought on crops and a charge related to a planned divestiture.
Decatur, Ill.-based ADM, with corn processing operations in Cedar Rapids and Clinton, posted net earnings of $182 million, or 28 cents per share, for the first quarter of fiscal year 2013, down from $460 million, or 68 cents per share, in the same quarter last year.
Revenue was relatively flat at $21.81 billion in the most recent quarter, compared with $21.9 billion in the first quarter of fiscal year 2012.
The first-quarter earnings were reduced by a charge of $146 million, or 16 cents per share, related to ADM’s planned sale of Gruma, a Mexican food company.
ADM Chairman and CEO Patricia Woertz called the first-quarter results mixed, saying the company's oilseed processing business was strong, but the ethanol industry experienced sustained negative margins and smaller crops were handed and sold by its agricultural services unit due to the drought.
"As we look ahead to 2013, we are bringing online our large Paraguay soybean processing plant as South American farmers are responding to market conditions with record plantings, and we are implementing plans to navigate the tight U.S. crop supply," Woertz said. "Longer-term, we remain optimistic as we see continued growth in global demand for protein meal and other agricultural products."
ADM's corn processing operating profit was $68 million, a decrease of $115 million from the same period last year.
Sweeteners and starches operating profit increased $64 million to $94 million, as tight sweetener industry capacity supported higher year-over-year selling prices.
Bioproduct results in the quarter declined $179 million to a loss of $26 million. Weak U.S. ethanol exports, strong Brazilian imports and slow E15 implementation kept industry margins negative.
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