ADM 4Q Profit Falls on Ethanol Unit
Associated Press -- DECATUR, IL -- July 31, 2012 -- Archer Daniels Midland, hammered by record corn prices, saw its net income for the fourth quarter tumble 25 percent.The agribusiness conglomerate has been faulted by some analysts for investing heavily in the ethanol market and that is where it saw its margins crushed in the most recent quarter. And it could get worse. Corn prices raced to another record Monday as the worst drought in decades left farmers' fields scorched.
Corn processing results slid $48 million because of negative ethanol margins.
Company shares slid nearly 6 percent before the opening bell.
The Decatur, Ill. company earned $284 million, or 43 cents per share, far short of Wall Street expectations well below the $381 million, or 58 cents per share, a year ago.
Revenue slipped less than a percent to $22.68 billion from $22.87 billion a year earlier.
Analysts expected a profit of 59 cents per share on revenue of $21.85 billion.
Refining, packaging, biodiesel and other generated a profit of $84 million for the quarter, down $6 million mainly on weaker biodiesel results from Europe, where half of the monetary union has slipped into recession. Corn processing took a hit from negative ethanol margins. Operating profit in the segment was down $48 million from last year, to $74 million.
Weaker merchandising in the U.S. also hurt the quarter's results. ADM's three main operating segments — which include corn processing, agricultural services and oilseeds processing, were strained.
Net income from the biggest segment, oilseeds, tumbled from $449 million to $331 million this year for the quarter.
ADM vowed to do the best it could facing such headwinds.
"While U.S. crop carryouts are expected to be low, we have an experienced business team to manage through this environment," said Chairman and CEO Patricia Woertz.
ADM expects the drought will weigh on operations going forward because of reduced crop sizes.
Shares of Archer Daniels Midland Co. fell $1.59 to $25.90
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