ADM profits double

Archer Daniels Midland (ADM) - the US' leading food processor - has reported record third quarter results across all its segment operations. The company's processing segments benefited from rallies in corn and soybean futures early this year as prices doubled to multiyear highs after a 2003 drought depleted US crops, writes Claire Johnston.

Net earnings for the quarter - ended 31 March 2004 - were $227 million, up 94 per cent when compared to the $117 million reported a year ealier. Segment operating profit increased by 107 per cent, up from $242 million the previous year, to $502 million.

Corn processing profit jumped 80 per cent to $160 million, and profit from oilseed processing, primarily soybeans, climbed 56 per cent to $117.5 million.

"The strong results this past quarter demonstrate the strength and balance of ADM's global franchise and the solid performance of our management team in a challenging business environment," said ADM chairman Allen Andreas.

Illinois-based agribusiness ADM, takes raw commodities such as corn and soybeans and processes them into products including ethanol, corn sweeteners and soymeal for animal feed.

Corn processing profits were boosted by a steady climb in prices and demand for the corn-based gasoline additive ethanol, following a New York and Connecticut ban on the use of its rival, additive methyl tertiary butyl ether, earlier this year.

ADM - the largest US producer of ethanol - was able to capitalize on the rise in futures prices by selling its products at a greater profit, for example ethanol prices are thought to have risen by 51 per cent, compared to last year, and 48 per cent for the quarter.

Other segment operating profits increased, as earnings of the Specialty Food and Feed Ingredients, Cocoa and private equity investments improved over prior year levels.

The company's agricultural services profit, including grain buying and storage, jumped sharply to $55.8 million on strength from expansion of its worldwide grain handling capabilities.

ADM was the last of the three big agribusiness companies to report earnings this quarter. White Plains, New York-based Bunge, the third biggest North American food processor, recently reported that its quarter earnings had risen by 75 per cent amid soaring soybean prices.

Privately held Cargill, the industry's second largest player, said earlier this month that quarterly profit had also risen by 11 per cent because of growth in its grain, oilseed and sugar units.