November 7, 2007

Higher selling prices hike ADM profits 

US agri-giant Archer Daniels Midland (ADM) has reported strong earnings for the first quarter due to high prices of its products, including sweeteners and starches.

ADM posted net earnings for the quarter ended September 30 2007 of US$441 million, up nine percent from last year.

Company chairman and CEO Patricia Woertz said the firm benefited from its performance in sweeteners and starches, oilseed processing and in grain merchandising and handling. Last year's profit driver was ethanol which saw a decline this year.

During the first quarter, ADM reported overall net sales of US$12.8 billion, a 36 percent increase on last year.  However, three quarters of this increase was a result of increased selling prices.  Higher sales volumes, principally vegetable oil and wheat, accounted for the remaining 25 percent increase.

Its oilseeds processing segment generated a US$39 million increase in operating profit to US$209 million due to strong global demand for protein meal and oil, ADM said. Worldwide crush volumes increased 2.4 percent to 7.2 million tonnes.

Operating profits for corn processing decreased by US$36 million to US$253 million from US$289 million last year due to lower ethanol sales prices and volumes but higher net corn costs.

Sweeteners and starches operating profit increased US$45 million to US$164 million on higher average sweetener and starch selling prices partially offset by higher net corn costs.

The firm reported a drop in its wheat, cocoa and malt operating profits primarily due to decreased cocoa processing results as higher cocoa bean and carrying costs negatively impacted press margins.

ADM announced in August that it would reorganize its entire business operations with an aim to further enhance its efficiency and pave the path for long-term success.  The reorganization involved creating a single operations group, responsible for the company's origination, merchandising, processing and marketing functions.