DECATUR, Ill.- Agribusiness giant Archer Daniels Midland Co. handily exceeded Wall Street's expectations Friday as improved performance in all of its major sectors contributed to a 68 percent increase in second-quarter earnings.
ADM said earnings for the three months ended Dec. 31 were $221 million, or 34 cents per share, compared with $131 million, or 20 cents per share, a year earlier.
Without a one-time charge of 3 cents a share for asset abandonment, ADM would have earned 37 cents a share for the latest quarter. Analysts surveyed by Thomson First Call were looking for earnings before charges of 27 cents a share.
Revenues for the quarter were $9.2 billion, up 18 percent from $7.8 billion in the second quarter a year ago.
"We did show some pretty substantial improvement in most of our sectors this quarter," G. Allen Andreas, chairman and chief executive officer said during a conference call with analysts. "I have no reason to believe it doesn't reflect long-term prospects for the company."
ADM stock, which closed earlier this week at a five-year high of $16.01, lost 3 cents a share to close at $15.66 on the New York Stock Exchange.
"We had high expectations for the quarter and they came in even higher than what we thought," said Christine McCracken, an analyst for FTN Midwest Research. "Clearly the company is firing on all cylinders in the current quarter."
However, McCracken said declining ethanol prices, a short soybean supply and expectations for weaker-than-expected contract pricing for high-fructose corn syrup might make ADM's results in the coming quarters "less robust."
Analyst John McMillin at Prudential Equity Group Inc. said ADM's shareholders are reaping a harvest brought about by higher demand for the company's products.
"Clearly the size and duration of this harvest period depends on variables outside of ADM's control like grain supplies, gasoline prices, currency and export demand," McMillin said.
The company said oilseed processing margins weakened in South America and Europe but improved in North America and Asia. Corn processing results improved because of higher volumes and selling prices of both ethanol and corn sweetener.
Ethanol profits were up substantially as the company drew down inventories to meet demand created by a ban on the petroleum-based additive MTBE in New York, Connecticut and California, the company said.
"We do have reason to believe there is very strong demand for ethanol across this country," Andreas said. "We're in a strong position in the ethanol business."
The reduced world supply of soybeans has led the company to slow its soybean processing operations, said Brian Peterson, ADM's vice president for corporate relations.
"We think it's prudent to try to extend our supplies by lowering our run rates," he said.
For the first six months of its fiscal year, net earnings were $371 million, or 57 cents per share, up from $239 million, or 37 cents per share, a year earlier. Revenues were $17.2 billion, up 16 percent from $14.8 billion.
The company's improving balance sheet allows it to consider expansion or a stock buyback, Andreas said.
Based in Decatur, ADM is one of the world's largest processors of soybeans, corn, wheat and cocoa. The company operates more than 270 processing plants and employs about 26,000 people worldwide.
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