ADM reports reduced Q3 earnings, points to weak ethanol market

By Holly Jessen | May 02, 2012

Archer Daniels Midland Co.’s third quarter financial results showed net earnings of $399 million, a 31 percent decrease from the same time period last year. The company released the information about the third quarter, which ended March 31, in a May 1 conference call.  “This quarter, we delivered very good results despite difficult margin environments, particularly in ethanol and European oilseeds,” said ADM Chairman and CEO Patricia Woertz. “The strong third quarter last year set a high bar, and this quarter represents a solid performance by the team.”

Thanks to poor ethanol margins, the company’s corn processing operating profits were $130 million, a decrease of $74 million from the same time period last year. The bioproducts segment earned operating profit of $37 million, a $121 million decrease. “Ethanol margins remained weak through the quarter, amid excess industry production that lessened through the quarter,” the company said. “Results also reflect a $14 million charge related to the closure of ADM’s 30 million gallon per year ethanol dry mill at Walhalla, N.D.”

On the other hand, sweeteners and starches operating profit went up $47 million to $93 million. Export demand for sweeteners remained strong and new sweetener contracts came into effect through the quarter, resulting in increased average selling prices.

The company predicted that global supplies of both corn and soybeans would tighten until the crops are harvested in North America. However, the outlook remains positive for the future. “Looking ahead, planting is under way in North America, and we’re encouraged by the projected corn and soybean acreage,” Woertz said. In addition, with depressed margins for U.S. ethanol, the industry has slowed production which has improved “alignment of supply and demand,” the company said.

The company also returned $171 million to shareholders during the third quarter. That included buying back nearly 2 million shares.

To see more details about ADM’s financial report, go to the company’s website.