August 3, 2011

ADM's profit decreases on higher taxes and corn prices

Archer Daniels Midland Co's quarterly earnings fell as a surge in income tax expenses and soaring corn prices affected results.

Revenue increased and operating profit rose in each of ADM's business segments except for corn processing, which was squeezed by record-high corn prices, ADM reported on Tuesday (Aug 2).

However, an effective income tax rate of 50% due to one-time items and changes in ADM's geographic mix of earnings, up from 19% a year earlier, more than tripled its tax burden.

ADM said the tax rate surge was atypical and it expects its effective tax rate to be in the range of 28%-30% in fiscal 2012.

For the fiscal fourth quarter, ended June 30, ADM reported a net profit of US$381 million, or 58 cents per share, down from US$446 million, or 69 cents per share, a year earlier.

Revenue rose to US$22.9 billion from US$15.7 billion.

Net profit in its corn processing segment, which includes its ethanol and starches and sweeteners businesses, fell 16% to US$118 million as corn prices surged.

That more than offset a 15% increase in processing volumes and higher selling prices of end products such as ethanol, sweeteners and animal feed ingredients.