ADM fiscal 4Q profit increases

Agricultural processor Archer Daniels Midland Co. said Monday its fiscal fourth-quarter profit more than doubled, pushed up by more than $600 million in asset sales.

Earnings from continuing operations, however, were more modest, hurt by the high cost of the corn that Decatur, Ill.-based ADM processes into products ranging from ethanol to soft drink sweeteners.

But the company said lower corn prices should help its earnings going forward.

Profit for the quarter ended June 30 totaled $954.8 million, or $1.47 per share, from $410.3 million, or 62 cents per share, during the same period a year earlier. Results include $616 million in one-time gains on asset sales.

From continuing operations, ADM reported a profit of $418 million, or 65 cents a share, from up from $410.3 million, or 62 cents, a year earlier. Some analysts calculated the company's earnings from continuing operations at 58 cents a share, a figure that accounts for inventory costs.

Net sales rose 28 percent to $12.21 billion from $9.55 billion a year earlier.

Analysts polled by Thomson Financial expected a profit of 59 cents per share on revenue of $10.13 billion. The earnings estimates typically exclude one-time items.

ADM shares rose 23 cents to $34.28 in afternoon trading.

"Our realignment and sale of assets are on target," ADM Chief Executive Officer Patricia Woertz said in a news release. "Our strategic capital projects are all on schedule, and we see adequate global crops to meet all needs."

ADM's one-time gains included $616 million from the swap of its interest in a number of Chinese joint ventures for shares in Singapore-based Wilmar International Ltd., Asia's largest agricultural processor.

ADM essentially swapped direct ownership of Chinese assets for a 16 percent stake in Wilmar, which has significant assets in China, ADM Chief Financial Officer Doug Schmalz said during a conference call with financial analysts. Wilmar shares increased 13.5 percent during the quarter.

ADM also reported a $153 million gain on the sale of its interest in Agricore United, a Canadian agricultural processor.

Corn-processing profit fell 16 percent for the quarter to $241 million, due to higher corn costs and lower ethanol sales volume.

Excluding one-time gains, oilseed processing profit fell $48 million for the quarter to $147 million.

Speaking with analysts, Woertz pointed out that corn prices have already fallen off recent highs and should help ADM. She similarly noted that the U.S. Department of Agriculture forecasts a record crop.

The analysts generally agreed that lower prices should benefit the company in the months ahead.

"The outlook looks bright due to our expectations of a robust U.S. Corn crop and declining corn prices," Citibank analyst David Driscoll wrote in a note to investors. He has a buy rating on ADM shares.

Woertz also said the expected size of the crop should give ADM a chance to increase shipping and grain-storage revenue after the harvest begins in late summer.

The company's agricultural services business includes grain storage and shipping. It announced last week that it added to those assets when it bought Fasco Mills, a network of 13 grain elevators in Illinois, the nation's No. 2 corn producer.

"With this large crop coming forward, I think there are opportunities for us to take advantage of our network there," she told analysts.

Some analysts questioned why ADM, unlike many competitors, sold less ethanol in the quarter than it had a year earlier.

ADM is the country's largest producer of the fuel additive, and industrywide production has increased rapidly the past few years. Profit in ADM's bioproducts business _ which includes ethanol sales _ fell to $142 million from $173 million a year earlier.

ADM Executive Vice President John Rice said the company's sales a year earlier were inflated by shipments to customers in markets where the use of MTBE, another fuel additive, was phased out by law because of pollution concerns.

One analyst, Vincent Andrews of Morgan Stanley, said even the diminished results were solid, given the increased ethanol supply as more production has come online.

For the fiscal year, ADM's net income rose 65 percent to $2.16 billion, or $3.30 per share, from $1.31 billion, or $2 per share, last year.

Revenue for the year rose 20 percent to $44.02 billion from $36.6 billion last year.