UPDATE 3-ADM profit misses Wall Street view; shares fall

Tue Nov 2, 2010 2:25pm EDT

* Q1 EPS 54 cents, vs Wall Street view 75 cents

* Net profit $345 mln, down 30 pct from year earlier

* Revenue of $16.8 bln tops analyst view $15.66 bln

* Shares fall 6.8 pct (Adds details, quotes, updates share price, adds byline)

By Karl Plume

CHICAGO, Nov 2 (Reuters) - U.S. agricultural processor Archer Daniels Midland Co (ADM.N) reported weaker-than-expected quarterly earnings on Tuesday, hampered by inventory charges and lower profit in its agricultural services business, sending shares down nearly 7 percent.

ADM, the world's largest corn processor and among the largest U.S. ethanol producers, said net profit fell 30 percent despite strong corn and oilseed processing results and better-than-expected revenue.

Operating profit fell 25 percent in ADM's agricultural services segment, the company's largest in terms of sales, due to "negative impacts from supply shifts" and "government actions" in the drought-hit Black Sea region, ADM said.

A severe drought slashed crop production in the region this year, prompting export curbs by Ukraine and a grain export ban by Russia expected to last through next July.

"People were looking for a much different outcome. Usually this is a company that can take advantage of geographic disparities and it looks like they got caught on the wrong side," said Ian Horowitz, analyst with Rafferty Capital Markets.

"Even if you adjust back the LIFO (last-in, first-out inventory accounting), the non-cash and the one-time charges, it wasn't really that strong of a quarter," he said.

Net income in the first quarter ended Sept. 30 fell to $345 million, or 54 cents per share, down from $496 million, or 77 cents per share, a year earlier.

Analysts on average were expecting earnings of 75 cents per share, according to Thomson Reuters I/B/E/S.

However, revenue rose to $16.8 billion from $14.9 billion, beating the analysts' average forecast of $15.66 billion.

ADM said rising commodity prices resulted in a LIFO charge of $123 million, or about 12 cents a share, compared with a $76 million credit in the same quarter a year earlier.

Stronger oilseed crush margins and increased volumes lifted ADM's oilseeds processing profit 8 percent to $308 million.

Corn processing profit jumped to $341 million from $188 million as bioproducts, which swung to a profit on improved ethanol and lysine margins and stronger ethanol sales, offset lower results in sweeteners and starches.

Shares of ADM were down about 6.8 percent at $31.11 on the New York Stock Exchange, the biggest single-day drop since May. Shares hit a 28-month high last week. (Reporting by Karl Plume, editing by Gerald E. McCormick)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.