This wasn’t even close…
Archer Daniels Midland (ADM) said Tuesday that first-quarter earnings were $1.05 billion, or $1.63 a share, compared to $441 million, or 68 cents a share, in the same period a year ago. Net sales rose 65% to $ 21.16 billion for the quarter ended September 30, mostly due to higher average selling prices resulting primarily from year-over-year increases in underlying commodity costs. Analysts polled by FactSet Research estimated, on average, earnings per share of 67 cents and sales of $15.79 billion.
“This record quarter again demonstrates the ability of our people to utilize our integrated global network and financial strength to capitalize on opportunities and further affirms our business model and strategy,” said Chairman of the Board and Chief Executive Officer Patricia Woertz. “Our strong balance sheet and credit rating provide us with the flexibility to access the most cost-efficient credit markets. Our market acumen coupled with this financial strength enables us to recognize and promptly act upon opportunities when they arise.”
Segment operating profit for the quarter increased 48 % to
$ 1.18 billion from $ 797 million last year.
* Oilseeds Processing operating profit increased on improved global crushing and origination margins, improved margins for value-added products and increased equity earnings of our Asian affiliates.
* Corn Processing operating profit decreased due principally to sharply higher net corn and energy costs partially offset by increased sales volumes and average selling prices for sweeteners and starches, ethanol and lysine.
* Agricultural Services operating profit increased due principally to improved margins resulting from opportunities created by market volatility, global shifts in sources of grain supplies and the delayed US harvest.
* Other operating profit increased due principally to improved cocoa processing volumes and margins and improved wheat processing margins.
For some inexplicable reason, investors still view ADM as an ethanol company like Pacific Ethanol (PEIX) and recent bankruptcy victim VeraSun (VSE). It isn’t. ADM is a food commodity company. Like Exxon (XOM) is a play on the commodity oil, ADM is a play on food and food items.
Yes, ethanol is a significant contributor to the overall picture but it is far from being the whole picture. ADM produces bio-diesel, cocoa, cooking oil, bio-plastics and has a massive commodity trading arm. The volatility is agricultural prices help ADM in this area.
As the world’s population grows and as it develops from a pure agrarian society to one that is more protien based, ADM is at the crux of that transition.
It will profit for years from it.
Disclosure (“none” means no position):Long ADM, none
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