August 5, 2009
ADM Q4 profit falls 83 percent on lower demand, slumping margins
Archer Daniels Midland Co. (ADM) fiscal fourth-quarter earnings plunged 83 percent amid weak demand, which led to segment losses at its ethanol and agricultural services segments.
The agribusiness industry has been struggling since commodity prices have dropped from their peak last summer. Ethanol-related businesses have been hammered by slumping demand for the corn-based fuel, with scores of them filing for bankruptcy. However, the US is considering several measures that could benefit the sector.
Chairman and Chief Executive Patricia Woertz said Tuesday (Aug 4) that ADM sees "signs of improving demand in the various food, feed and fuel markets we serve."
For the quarter ended June 30, ADM by revenue reported a profit of US$64 million, or 10 cents a share, down from US$372 million, or 58 cents, a year earlier. Revenue decreased 24 percent to US$16.53 billion.
Analysts polled by Thomson Reuters most recently were looking for earnings of 45 cents on revenue of US$15.24 billion.
Gross margin fell to 2.2 percent from 3.7 percent.
At the oilseed-processing division, the company's largest segment, earnings fell 40 percent as volume declined and fertiliser margins fell. The corn processing division, which includes ADM's ethanol business, as well as starches and sweeteners, moved to a segment loss mostly on weak demand for ethanol.
Shares were off 2.7 percent to US$29.55 in premarket trading. The stock is up 11 percent the past year.
