High Corn Prices Limit ADM Sweetener Profits

Sweeteners and starches operating profit decreased $118 million to $28 million, as higher net corn costs more than offset higher average selling prices and sales volumes.

Nov 2 2011 --- Archer Daniels Midland Company has reported financial results for the quarter ended September 30, 2011. The company reported net earnings for the quarter of $460 million, or $0.68 per share, up 33 percent and 26 percent respectively from the same period one year earlier. Adjusted earnings per share1 which excludes the impact of LIFO and other adjustments of $0.58 was 13 percent lower than the prior year quarter. Segment operating profit1 was $699 million, down 9 percent from the prior year quarter.

“The first quarter presented a difficult and challenging market environment,” said ADM Chairman and CEO Patricia Woertz. “Margin conditions in our global oilseeds segment were generally weak, and net corn costs were high. We offset some of these pressures with good management of our commodity positions and by capturing opportunities through our broad and diverse portfolio.”

“During the quarter, we acquired oilseeds facilities in Poland and India, and expanded our agricultural services operations to support exports. And we returned capital to shareholders through dividends and share buybacks of $347 million,” added Woertz. “Looking ahead, we see the margin environment modestly improving, and we are optimistic about the long term.”

Oilseeds operating profit in the first quarter was $221 million, down $87 million from the same period one year earlier. Crushing and origination operating profit fell $61 million to $115 million. A weak margin environment for global soybean crushing and European rapeseed crushing depressed earnings. That impact was mitigated by stronger results from ADM’s North American softseed businesses and South American origination. Refining, packaging, biodiesel and other generated a profit of $49 million for the quarter, down $27 million, as good North American biodiesel demand and strong volumes and margins of protein specialty products offset lower results from South America and Europe. Oilseeds results in Asia for the quarter were in line with last year, principally reflecting ADM’s share of the results from equity investee Wilmar International Limited.

Corn processing operating profit was $179 million, down $162 million from the same period one year earlier. Processed volumes were up 5 percent, though overall net corn costs more than doubled from the first quarter of last year. Sweeteners and starches operating profit decreased $118 million to $28 million, as higher net corn costs more than offset higher average selling prices and sales volumes. Export demand for sweeteners remained strong. Net corn costs for sweeteners and starches were negatively impacted by corn futures economic hedging benefits recognized in prior quarters. Bioproducts profit in the quarter decreased $44 million to $151 million. Lysine and spot ethanol margins in the quarter were good. Offsetting the margin benefit, ADM ownership gains were lower than the prior year.