May 5, 2010

Archer Daniels Midland Co., the world's largest grain processor, posted fiscal third-quarter profit that trailed analysts' estimates as lower prices for sweeteners and starches reduced earnings from processing corn.

Net income rose to US$421 million, or 65 cents a share, in the three months through March, from US$3 million, or break-even on a per-share basis, a year earlier, Decatur, Illinois-based ADM said in a statement. The average estimate of 10 analysts in a Bloomberg survey was 72 cents. Sales rose 2% to US$15.1 billion.

ADM, led by Patricia Woertz, is facing lower prices for some products from its corn-processing division while costs for the grain have not declined as quickly. Operating profit from sweeteners and starches fell 69% from a year earlier to US$45 million, ADM said. The price of the corn-based fuel ethanol has dropped 15% this year on the Chicago Board of Trade.

"Falling ethanol and corn syrup prices cloud the picture for ADM for the rest of the calendar year," Robert Moskow, an analyst for Credit Suisse Group AG in New York, wrote in a report. "Big mark-to-market losses in the corn syrup and wheat-milling business caused the miss versus our estimates."

Earnings in the corn-processing unit more than doubled to US$104 million. The results trailed Moskow's estimate of US$132 million. ADM's profit of US$9 million from refining other commodities, mostly wheat and cocoa, missed his projection of US$100 million.

Better-than-expected performance in the oilseeds and agricultural-services segments tempered the corn-processing, wheat and cocoa results, David Lagasse, assistant vice president of corporate credit research for Brookfield Investment Management Inc., said in an e-mail. Profit excluding a US$47 million debt-retirement charge was generally in line with expectations, Lagasse said.

Earnings in the oilseeds-processing unit rose 81% to US$405 million. Profit in the agricultural-services unit - which includes grain storage and transportation - rose 36% to US$165 million. The unit is the company's biggest by sales.