Archer Daniels Sales
Surge, Profit Falls Short
DOW JONES NEWSWIRES
August 5, 2008
Smart Money
Archer Daniels Midland Co. (ADM) said sales surged in its
fiscal fourth quarter on the strength of higher commodity prices, though
profits at the agribusiness giant didn't keep up with that pace.
For the quarter ended June 30, ADM reported net income of
$372 million, or 58 cents a share, down from $955 million, or $1.47 a share, a
year earlier. Revenue jumped 78% to $21.78 billion.
The profit picture was complicated by gains from assets
sales last year, which added $616 million after taxes to year-earlier results.
Excluding the effect of those gains, profits grew by about 10%.
Analysts polled by Thomson Reuters had expected earnings of
67 cents a share and revenue of $16.04 billion.
ADM said 90% of the increase in sales was driven by higher
commodity costs, which boosted the company's average selling prices. The rest
of the sales increase was driven by higher sales volumes, principally in
ethanol and merchandised oilseeds and grains.
Profits in ADM's trading business and oilseed processing
division each fell due to the prior-year gains the swap of some Chinese
joint-venture stakes for shares in Singapore-listed commodities firm Wilmar International Ltd and the sale of an investment in
Agricore United. Net sales in each of the company's three main segments were
sharply higher, however.
Corn processing earnings rose 14% to $262 million amid
increased ethanol sales volumes and higher average selling prices of sweeteners
and starches.
In a recent report, Citigroup analysts said business
conditions are likely to become more difficult for ADM as "higher corn
prices associated with the June flooding across the
Despite the near-term challenges, over the next few years
ADM will be in a "sweet spot," due to strong food demand combined
with the rapidly growing biofuels industry, Citigroup
said.
Last month ADM created a lobbying group with seed makers
Monsanto Co. (MON) and DuPont Co. (DD), as well as Deere & Co. (DE), to
promote the idea renewable fuels won't cut into food supplies if new technologies,
such as genetically modified crops, are used to their fullest. The group,
called the
The alliance faces fierce opposition from food producers
like Tyson Foods Inc. (TSN), which attributes rising inflation on
Shares closed Monday at $27.40, and there was no premarket
activity.
-By Jennifer Hoyt, Dow Jones Newswires
smartmoney.com