Archer Daniels Midland Company (ADM) reported a disappointed fourth-quarter 2011 results. Net income for the reported quarter was $381.0 million or 58 cents per share compared with $446.0 million or 69 cents per share in the year-ago quarter. Quarterly earnings also missed the Zacks Consensus Estimate of 84 cents a share.
Earnings in the reported quarter declined primarily due to a robust rise in income tax rate, partially offset by increased segmental profit and positive discrepancy from changes in Last-In-First-Out (LIFO) inventory valuations caused by lower agricultural commodity prices.
Quarterly Details
Archer Daniels’ quarterly net sales surged 45.6% year over year to $22,870.0 million, beating the Zacks Consensus Estimate of $20,484.0 million. The growth in net sales was mainly attributable to a robust jump of 42.2% in Agricultural Services to $9,960.0 million, a rise of 56.1% in Oilseeds Processing revenues to $8,567.0 million and an increase of 44.3% in Corn Processing revenues to $2,841.0 million.
Total segment operating profit for Archer Daniels increased to $888.0 million from $799.0 million in the prior-year quarter. Operating profit for Agricultural Services segment grew 8.4% to $193.0 million from $178.0 million in the year-ago period, reflecting strong results from North American interior elevators and export operations, partially offset by weaker international operations.
Archer Daniels’ Corn Processing segment’s operating profit inched down to $118.0 million from $140.0 million last year. The decline was primarily attributed to a significant surge in net corn costs, partially offset by improvement in bio-products performance, stemming from better margins of ethanol and lysine and increased processing volume.
Archer Daniels’ Oilseeds Processing segment recorded a quarterly operating profit of $379.0 million compared with an operating profit of $359.0 million in the year-ago period. The increase was primarily attributable to better performance in North America.
Operating profit from the other business segment came in at $198.0 million compared with an operating profit of $122.0 million in the year-ago quarter.
The long-term debt-to-capitalization ratio was 31.0% compared with a long-term debt-to-capitalization ratio of 32.9% in the prior-year quarter.
Archer Daniels, which competes with Bunge Limited (BG) and Corn Products International Inc. (CPO), currently has a Zacks #4 Rank, implying a short-term Sell rating on the stock. The company also retains a long-term Neutral recommendation.
