ADM reports 53 percent drop in Q1 profit
The head of Archer Daniels Midland Co. (ADM) said last Tuesday that she remained optimistic that U.S. farmers could bring in a late harvest despite poor weather that has raised fears of reduced supply and yields.
Pat Woertz, chairman and CEO of the U.S. agribusiness group, also pointed to firming demand, notably in export markets.
“We do see demand up in some key markets,” said Woertz on a conference call after ADM reported a 53 percent drop in fiscal firstquarter profit, weighed by lower commodity prices.
Woertz remained optimistic about ADM’s ethanol business, a key driver of earnings over the past two years. The segment was profitable in the latest quarter—excluding intercompany accounting costs—and producers hit by weak pricing are looking to a key U.S. government ruling next month on its use as a gasoline additive to boost demand.
However, the late U.S. harvest is also being closely monitored by the agribusiness sector as wet conditions and the onset of winter threaten corn and soybean supplies.
ADM executives pointed to the ability of farmers to pull crops from the ground quickly when weather conditions allow, though noted they were seeing more “damaged” corn.
The company is also boosting its capacity to dry and store wet crops.
ADM reported a profit of $496 million, or 77 cents a share, in the quarter. This compared with a profit of $1.05 billion, or $1.62 a share, a year earlier. Net sales decreased 29 percent to $14.9 billion amid lower average selling prices and a negative foreign exchange impact. Gross margin fell to 6.5 percent from 8.8 percent.
“We are executing on our growth strategy,” said Woertz, pointing to the potential for “fill-in” deals to expand its global footprint handling, transporting and processing a range of foodstuffs. — DTN