Archer Daniels Midland Company (ADM), one of the leading food processing companies in the world, reported fiscal 2010 second quarter earnings of $567 million or 88 cents per share, compared to $578 million or 90 cents per share in the year-earlier quarter. Earnings exceeded the Zacks Consensus Estimate by a hefty margin of 16 cents.
The year-over-year decrease in quarterly earnings was primarily due to a $177 million pre-tax decline in corporate results related to the change in LIFO inventory valuations, partially offset by increased segment operating profit. The company recorded a 5% decline in quarterly net sales to $15.9 billion from $16.7 billion in the year-ago period, primarily due to lower average selling prices resulting from year-over-year decreases in underlying commodity costs.
Total segment operating profit for Archer Daniels increased 19% to $970 million during the quarter compared to the year-ago period. Operating profit for Oilseeds Processing segment increased $33 million year-over-year due to higher volumes and improved margins.
Operating profit for the Corn Processing segment increased $261 million year-over-year on lower net corn costs and improved bioproducts results. Bioproducts operating profit increased $230 million for the quarter due to improved ethanol margins and higher sales volumes resulting from lower net corn costs, decreased manufacturing costs, and favorable gasoline blending economics.
Operating profit for the Agricultural Services segment decreased $312 million year-over-year as merchandising results declined $282 million for the quarter. Operating profit from the Other business segment increased $173 million for the quarter due to increased equity earnings from its investment in Gruma S.A.B de C.V., improved global wheat milling margins, and increased cocoa processing earnings. Archer Daniels ended the quarter with cash and cash equivalents of $1.3 billion and long-term debt of $7.6 billion.
During the quarter, Archer Daniels started up its ethanol dry mill in Columbus, Nebraska, adding 300 million gallons of annual capacity. The company also brought in line a co-generation facility in Iowa and started up the boilers at its Columbus cogeneration facility. With these new facilities, Archer Daniels achieve cost-effective process steam and electricity to adjacent corn wet and dry mills.
Also during the quarter, the company completed its Brazilian JV sugarcane ethanol plant, which is now operational. At the same time, Archer Daniels integrated its newly acquired processing plant in Olomouc, Czech Republic, thereby augmenting its access to the Central European market and expanding its origination footprint.
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