ADM Q2 profit rises amid robust global oilseed demand

CHICAGO Tue Feb 5, 2013 9:16am EST

CHICAGO (Reuters) - Archer Daniels Midland Co (ADM.N) reported higher quarterly profit on Tuesday as strong demand for oilseeds helped the agricultural giant shake off the impact of a historic U.S. drought.

Shares rose before the market opened as its results topped Wall Street estimates.

ADM's U.S. soybean operations ran at record capacity during the quarter ended December 31 amid firm export demand for soybean meal. Processors also stepped up crushing of soybeans because the drought-hit U.S. soybean harvest this year produced a lower soymeal yield.

The drought nagged at ADM by reducing the amount of farm products available for transportation and processing and by lowering water levels on the Mississippi River shipping superchannel.

"We fully utilized our oilseeds crushing capacity to meet strong global demand, and we adjusted our transportation and origination network to move goods efficiently despite constrained river traffic and a smaller corn crop," ADM Chief Executive Patricia Woertz said in a statement.

Strong demand for oilseeds has helped the world's top agricultural traders and processors rebound from a tough environment last year, when prices often swung based on global economic concerns instead of fundamentals of supply and demand.

ADM rival Cargill CARG.UL said last month that "more fundamentally driven markets" helped it quadruple earning in the quarter ended November 30, with results buoyed by gains in global commodities trading and oilseed processing.

ADM and Cargill are among the four large so-called ABCD players that dominate the global flow of agricultural commodities. The other two are Bunge (BG.N) and Louis Dreyfus.

ADM's profits "demonstrated the ability of our people to use our global asset network to prepare for and manage in a range of market conditions," Woertz said.

ADM, one of the world's top grain traders, posted net earnings of $510 million, or 77 cents per share, in the second quarter ended December 31, up from $80 million, or 12 cents per share, in the same period a year earlier. Adjusted earnings were 60 cents per share, up from 51 cents in the same period last year.

Total revenue was $24.92 billion, up from $23.31 billion a year earlier, according to the Decatur, Illinois-based company.

Analysts projected earnings of 58 cents per share on revenue of $21.22 billion.

ADM stock rose 2 percent to $29 in premarket trading.

GRAINCORP GAIN

ADM bought up shares in Australia's GrainCorp (GNC.AX) late last year and said it made a $62 million gain on its investment during the quarter.

GrainCorp in December rejected a $2.9 billion takeover offer from ADM as too low but said it remained open to higher offers and would hold further talks with its U.S. suitor.

ADM is seeking to expand its global footprint since it is more focused on the United States than rivals like Bunge.

The focus on the United States could put ADM at a disadvantage this year, when farmers in South America are expected to harvest a massive soybean crop. Farmers in the United States are worried about dryness lowering production for another year.

Bunge is set to report earnings on Thursday.

(Reporting by Tom Polansek; Editing by Jeffrey Benkoe)