ADM Operating Profit Up in Q3

02/05/08 ADM has reported that third quarter segment operating profit increased 54 % to $ 913 million from $ 593 million last year.

Oilseeds Processing operating profit increased as global demand for protein and oil improved.. Corn Processing operating profit decreased due principally to higher net corn costs. Agricultural Services operating profit increased as highly volatile market conditions provided exceptional merchandising opportunities. Other segment operating profit increased due to improved margins and increased financial services income.

Net sales and other operating income increased 64 % to $ 18.7 billion for the quarter and 51 % or $ 16.2 billion for the nine months. Increased selling prices resulting primarily from sharp rises in commodity prices accounted for approximately 85 % of the increase while higher sales volumes, principally vegetable oil and meal, feed grains and wheat, accounted for the remaining 15 % increase.
A summary of segment operating profit and net earnings is as follows:

Net earnings increased $ 154 million for the quarter and $ 223 million for the nine months due principally to increased segment operating profit of $ 320 million for the quarter and $ 657 million for the nine months partially offset by increased corporate expenses for LIFO inventory valuations and minority interest elimination for both the quarter and nine months. Income taxes increased $ 45 million for the quarter and $ 103 million for the nine months due principally to increased pretax earnings for both the quarter and nine months partially offset by a lower effective tax rate for the quarter due to changes in the geographic mix of earnings.

Oilseeds Processing operating profit increased $ 52 million for the quarter and $ 119 million for the nine months due principally to continuing strong global demand for protein meal and vegetable oil. Crushing and origination results increased $ 78 million for the quarter and $ 117 million for the nine months due to improved processing margins in North and South America and increased worldwide crushing volumes. Refining, packaging, biodiesel and other results decreased $ 16 million for the quarter and $ 9 million for the nine months due principally to weaker biodiesel margins in Europe. Last year’s quarter and nine month results for refining, packaging, biodiesel and other include a $ 14 million gain from business disposals.

Corn Processing operating profit decreased $ 79 million for the quarter and $ 177 million for the nine months due primarily to increased net corn and manufacturing costs, principally energy. Partially offsetting these higher costs, sweeteners and starches selling prices increased for the quarter and nine months and sales quantities of ethanol increased for the quarter and nine months. Increases in sales prices and volumes for the quarter and nine months of lysine also favorably impacted bioproducts earnings.

Agricultural Services results increased $ 320 million for the quarter and $ 618 million for the nine months to record levels due principally to continuing enhanced merchandising and handling margins caused by the highly volatile global grain markets and favorable risk management results. Transportation results decreased $ 16 million for the nine months due to higher operating costs, principally fuel.

Other operating profit increased $ 27 million for the quarter and $ 97 million for the nine months. Wheat, cocoa and malt operations improved $ 8 million for the quarter and $ 30 million for the nine months due principally to favorable risk management results in wheat and malt partially offset by decreased cocoa processing margins. Last year’s quarter and nine month wheat, cocoa and malt results include a $ 39 million gain from business disposals. Financial earnings improved $ 19 million for the quarter and $ 67 million for the nine months principally due to higher brokerage services income, decreased insurance loss provisions, marketable securities gains and improved earnings from managed fund investments.

“ADM’s third-quarter performance demonstrates the ability of our balanced operations, global network and solid balance sheet to deliver strong results amid fluid markets,” said Patricia Woertz, Chairman and CEO. “Volatility in commodity markets presented unprecedented opportunities. Once again, our team leveraged our financial flexibility and global asset base to capture those opportunities to deliver shareholder value.”