Ag products company ADM’s 2Q profit slips 2 percent as revenue falls due to lower prices

Archer Daniels Midland profit slips, revenue falls

ST. LOUIS — Archer Daniels Midland Co. said Tuesday its fiscal second-quarter profit slipped 2 percent as its revenue was depressed by lower prices for agricultural products.

While sales volumes rose during the quarter, that was offset by global food prices that have been dragged down from historic highs reached in 2008. The global recession has depressed the price of key products like corn and soybeans as consumers cut back spending.

ADM, based in Decatur, Ill., is vulnerable to swings in food prices because it sells, ships and produces everything from raw soybeans to corn-based food ingredients and ethanol.

But the company said it will benefit from a strengthening market for ethanol, which had been battered by low demand and higher corn costs.

Operating profit in ADM’s corn processing segment, which includes its ethanol business, jumped 10-fold during the quarter, to $290 million from $29 million a year ago. The company started up an ethanol plant in Columbus, Neb. that will produce 300 million gallons annually, signaling confidence that the ethanol market might be pulling out of a long slump.

“We have an optimistic view of the ethanol business, or we wouldn’t have built the capacity,” Chief Executive Patricia Woertz told investors during a conference call Tuesday. She said the ethanol business could still be characterized by swings in price and oversupply, but ADM is well positioned to weather the volatility because of its size.

Its shares rose $1.47, or 4.9 percent, to $31.63 Tuesday.

The company said it earned $567 million, or 88 cents per share, in the three months ended Dec. 31, down from $578 million, or 90 cents per share, a year ago.

Analysts surveyed by Thomson Reuters expected 72 cents per share, but typically exclude one-time items from the estimates.

Even with sales volumes up, ADM says revenue fell 5 percent to $15.9 billion from $16.7 billion a year ago. Analysts expected revenue in the latest quarter of $16.5 billion.