Grain processor Archer Daniels Midland Co. (ADM: Quote) on Tuesday reported a 31 percent decline in profit for the third quarter, as weak margins for ethanol and European oilseeds offset the benefits from higher revenues.
The weak margins caused the Decatur, Illinois-based company to report a 12 percent drop in operating profit, despite revenue growth of 5 percent.
Operating profit at ADM's oilseeds processing segment declined 23 percent from last year, primarily due to the absence of significant, favorable timing effects that benefited year-ago results. Improved results in North and South America significantly offset weakness in Europe, it said.
Corn processing segment operating profit dropped 36 percent reflecting poor ethanol margins, which remained weak through the quarter amid excess industry production.
Meanwhile, agricultural services operating profit rose 5 percent as weakness from lower North American grain exports was offset by improved international merchandising margins and volumes.
ADM's net earnings for the third quarter were $399 million or $0.60 per share, down from $578 million or $0.86 per share in the year-ago period.
Excluding a LIFO charge of $0.10 per share and restructuring charges of $0.08 per share, earnings dropped to $0.78 per share from $0.89 per share last year.
On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.59 per share. Analysts' estimates typically exclude special items.
Net sales and other operating income rose 5 percent to $21.16 billion from $20.08 billion in the same period last year. Analysts had a consensus estimate of $21.38 billion.
ADM's total processing volumes for the quarter improved to 16.07 million metric tons from 15.06 million metric tons in the year-ago quarter.
Patricia Woertz, Chairman and CEO of ADM said, "Looking ahead, planting is underway in North America, and we're encouraged by the projected corn and soybean acreage."
In early January, ADM said it will lay off 1,000 employees, or 3 percent of global workforce, to lower expenses and enhance productivity.
ADM closed Monday's trading at $30.83, down $0.25 on a volume of 3.90 million shares.
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by RTT Staff Writer
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