Archer Daniels Midland Company (ADM), the agricultural processor company, recently reported first-quarter 2010, topping the Zacks Consensus Estimate on the heels of lower corn costs.
The quarterly earnings of 77 cents a share surpassed the Zacks Consensus Estimate of 56 cents but fell 52% year-on-year from $1.62 in earnings delivered in the prior-year quarter, as the ethanol business has been grappling with a slump in demand for corn-based fuel, a gasoline substitute. With oil prices hovering around $77, the production of ethanol is losing its feasibility.
Total revenue tumbled 29% to $14,921 million due to a decline in average selling prices and, to some extent, currency fluctuations. Total segment operating profit plunged 34% to $774 million.
Due to the slump in demand, the Oilseeds Processing segment’s revenue fell 18% to $6,358 million, and operating profit plunged 44% to $284 million due to a fall in margins and lower production volumes.
Corn Processing’s operating profit jumped 59% to $188 million due to lower corn and manufacturing costs. However, revenue for the division declined 15% to $1,916 million.
The Agricultural Services unit’s revenue dropped 44% to $5,322 million. The segment operating profit also declined 59% to $175 million due to a slump in demand for agricultural commodities amid the prolonged recession.
Despite the economic turmoil, Archer Daniels continues with its major projects — a co-generation plant in Clinton, Iowa; beginning operations at its new cocoa processing facility in Kumasi, Ghana; starting production at its first sugarcane ethanol plant in Brazil and at its new Columbus, Nebraska ethanol plant. The company also acquired an oilseed processing plant in Olomouc, Czech Republic.
Read the full analyst report on “ADM”
Zacks Investment Research
