Archer Daniels Midland Company (ADM) reported a 33 percent increase in earnings on Tuesday from the same period a year ago. Still, a low corn supply in the United States and weak conditions in oilseed-segment margins staggered profits for one of the world's largest grain processors.
For the three-month period that ended Sept. 30, ADM posted net earnings of $460 million, versus $345 million a year ago.
Net sales jumped to $21.9 billion, up more than 30 percent from last year's $16.8 billion in the same period. But cost of products sold also jumped more than 31 percent to about $20.9 billion.
Diluted earnings per share rose14 cents to $0.68 from $0.54 a year ago.
The first quarter presented a difficult and challenging market environment, ADM chairman and CEO Patricia Woertz said in a release from the company.
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.
The most drastic of its drops in profit came from corn processing, which fell $162 million to $179 million, down about 48 percent from a year ago. Overall net corn costs more than doubled from a year ago. ADM's oilseeds processing profit also declined $87 million to hit $221 million.
A report delivered by the United States Department of Agriculture on Oct. 12 projected corn production would be 64 million bushels lower in 2011-12 with a more limited planting and harvesting area, leading to a lower supply and higher costs. U.S. production of oilseeds was down 800,000 over the 2011-12 period.
We are expecting a modest improvement in the oilseeds environment moving forward, Juan Luciano, ADM's chief operating officer, said in a conference call with analysts and investors Tuesday morning.
Agricultural services helped offset some of the losses, as the segment's profit increased by $112 million to $244 million on what it described in the report as strong global merchandising results, including a strong recovery of exports from the Black Sea region.
Overall, the segment operating profit stood at $699 million, down $66 million from a year ago. On the call and in her statement, Woertz expressed optimism for upcoming segments.
Looking ahead, we see the margin environment modestly improving, and we are optimistic about the long term, she said.
As of 2:15 p.m. Tuesday, shares of ADM were down almost 3.8 percent.