Archer Daniels Midland beats 4Q profit estimate, misses sales forecast

Archer Daniels Midland released a mixed fourth quarter result Tuesday. (Copyright © Archer Daniels Midland)

By Yasufumi Saito

Archer Daniels Midland Co., a leading agricultural processer and food ingredient provider, reported Tuesday a mixed result for the fourth quarter. While profit beat Wall Street’s estimate, sales fell short of expectations.

For the quarter ended Dec. 31, profit was $701 million, or $1.08 per diluted share, up 87.4 percent from $374 million, or 56 cents per diluted share, in the year-ago quarter. It topped a consensus earnings estimate of 94.2 cents per share as compiled by Bloomberg L.P.

Earnings in agricultural services sharply improved as the agribusiness giant handled record volumes of U.S. corn and soybean crops that the company trades and processes.

Higher profit from ethanol, the corn-based biofuel, contributed to the corn processing segment, but it was offset by rising grain costs and lower average selling prices of sweeteners and starches.

ADM1Sales declined 13.5 percent to $20.89 billion from $24.14 billion in the year-earlier quarter, missing a forecast of $23.91 billion as compiled by Bloomberg.

Quarterly revenues of the oilseeds processing segment dropped 13.9 percent to $7.04 billion, the corn processing segment’s revenues slipped 5.4 percent to $2.89 billion and the agricultural services segment’s revenues plunged 16.9 percent to $10.56 billion, all on a year-over-year basis.

“We don’t think the outsize ag services profits will last forever,” said Jeffrey Stafford, equity analyst at Morningstar Inc., in a note. “Weather fluctuations probably won’t lead to bumper crops year after year.”

The recent falling price of crude oil casts a negative forecast on ethanol makers.

“While U.S. ethanol demand was seasonally strong, boosted by the domestic response to lower gasoline prices, high industry production has built excess inventories,” said CEO Juan Luciano in a statement. “Margins in this industry should remain challenged until supplies are better aligned with demand.”

“The firm’s ethanol business produced better results than we expected,” Stafford said in the note. But the outlook isn’t optimistic. “Lower oil prices, which increased the demand for cheaper gasoline and thus the demand for ethanol, were probably a contributor to ethanol’s outperformance,” he said.

ADM2For the full year of 2014, earnings increased 67.5 percent to $2.25 billion, or $3.43 per diluted share, from $1.34 billion, or $2.02 per diluted share, in the year-ago period. Sales, however, decreased 9.6 percent to $81.2 billion from $89.8 billion in the same period.

The Decatur, Illinois-based company raised its quarterly dividend by 17 percent to 28 cents per diluted share.

ADM shares closed up 59 cents, or 1.22 percent, at $48.76.

Archer Daniels Midland released a mixed fourth quarter result Tuesday. (© Archer Daniels Midland)