UPDATE 4-ADM profit falls on higher taxes and corn costs

Tue Aug 2, 2011 1:42pm EDT

* Q4 EPS 58 cents vs 69 cents year ago

* Revenue $22.9 bln vs $15.7 bln

* Income tax expense, record corn prices weigh on results

* Shares fall almost 4 percent (Adds analyst quote, updates share price)

By Karl Plume

CHICAGO, Aug 2 (Reuters) - U.S. agricultural processor Archer Daniels Midland Co's (ADM.N) quarterly earnings fell as a sharp jump in income tax expenses and soaring corn prices dragged on results, sending its shares down almost 4 percent.

Revenue increased and operating profit rose in each of ADM's business segments -- except for corn processing, which was squeezed by record-high corn prices, the Decatur, Illinois-based company reported on Tuesday.

"Fundamentally the earnings were weaker than expected and the weakness is coming from a division, the corn sweeteners, which is supposed to be a pretty consistent earner and has ended up close to break-even," said Robert Moskow, analyst with Credit Suisse.

Oilseed processing segment results were also below expectations, he added.

Meanwhile, an effective income tax rate of 50 percent due to one-time items and to changes in ADM's geographic mix of earnings, more than tripled its tax burden to $385 million from $105 million a year before, when the tax rate was only 19 percent.

ADM said the tax rate surge, which raised its full fiscal year tax rate to 33 percent, was atypical and it expects its effective tax rate to be in the range of 28 percent to 30 percent in fiscal 2012.

"This additional tax expense caused our quarterly net earnings to decline 15 percent," Chief Financial Officer Ray Young said on a call with analysts.

The company's geographic blend of earnings in the quarter was more heavily tilted toward the United States, where taxes on some of ADM's earnings were higher.

Meanwhile, a stronger-than-projected Brazilian currency at the end of the quarter also triggered higher taxes, he added.

PROFIT DIPS

For the fiscal fourth quarter that ended June 30, ADM reported a net profit of $381 million, or 58 cents per share, down from $446 million, or 69 cents per share, a year earlier.

Revenue rose to $22.9 billion from $15.7 billion and processing volumes jumped more than 4 percent. But margins were squeezed by lofty crop prices, including prices for corn, which have risen about 75 percent over the past year.

ADM is one of the world's largest grain processors and is among the top ethanol producers in the United States.

Net profit in its corn processing segment, which includes its ethanol and starches and sweeteners businesses, fell 16 percent to $118 million as corn prices surged.

That more than offset a 15 percent increase in processing volumes and higher selling prices of end-products such as ethanol, sweeteners and animal feed ingredients.

Oilseed processing profit rose 5 percent to $379 million on stronger North American results, but margins remained weak.

Net profit in its agricultural services segment, the company's largest in terms of revenue, rose 8 percent to $193 million. The unit buys, sells, stores and transports agricultural products.

ADM's other business segment, which includes wheat milling and cocoa processing, posted a net profit of $198 million, up 62 percent from a year earlier.

ADM's shares were down $1.18 or 3.9 percent to $29.30 in afternoon trading on the New York Stock Exchange after falling as low as $28.92 earlier. (Reporting by Karl Plume; editing by Gerald E. McCormick and Andre Grenon)

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