U.S. agribusiness Archer Daniels Midland Co (ADM.N) boosted trading revenue last quarter, navigating choppy markets better than its rivals, but saw its profit slump on soaring corn prices and poor oilseed processing margins.
While volatile markets tripped up competitors Cargill CARG.UL and Bunge (BG.N) in the global grains trade, ADM reported its grain merchandising and handling profits more than doubled as exports from the drought-hit Black Sea region resumed after a year-long hiatus.
Still, ADM shares fell nearly 6 percent on Tuesday on investor concerns about the global economy and as the broad market also fell.
Cargill and Bunge reported weaker-than-expected quarterly results last month as global economic uncertainty and euro zone debt worries whipsawed markets and many commodities saw their most turbulent period since the financial crisis.
ADM's strong performance came even as its export volumes from the United States, the world's largest grain supplier and home base for ADM, were lower, highlighting a recent string of investments and acquisitions in Eastern Europe and Asia.
"The merchandising and handling area ... is where you saw Cargill and Bunge both stumble so that was the biggest surprise, their ability to hold on to that merchandising number," said analyst Jeff Farmer of Jefferies & Co.
During the quarter, the company bought two oilseed processing plants in India, acquired a majority share of a Polish vegetable oils maker, and set plans to expand grain and oilseed storage in Germany. In August, ADM said it was growing its network of grain elevators and terminals in Romania.
But soaring corn prices, which more than doubled over the past year, squeezed the world's largest processor of the grain, with profit down 23 percent in bioproducts, which includes ethanol, and down 81 percent in sweeteners and starches.
Oilseed processing was another weak link for Decatur, Illinois-based Archer Daniels, which posted adjusted earnings of 58 cents per share, which excluded inventory gains and one-time items, down 13 percent from a year ago.
"The first quarter presented a difficult and challenging market environment. Margin conditions in our global oilseeds segment were generally weak, and net corn costs were high," said ADM CEO Patricia Woertz.
She highlighted solid global demand for crops and rising protein meal demand from emerging economies, along with good ethanol margins and modestly improved oilseed margins.
ADM shares fell as much as 5.8 percent on Tuesday, adding to a 4.6 percent slide the previous day. Tuesday's drop exceeded that of rivals, as investors weighed the company's optimistic outlook against headwinds from an uneasy global economy. Shares had peaked at a three-month high last week.
ADM shares were down 2.9 percent at $28.11 on Tuesday afternoon, off an earlier low at $27.25.
For the fiscal first quarter that ended September 30, ADM reported a net profit of $460 million, or 68 cents per share, up from $345 million or 54 cents a share in the same quarter a year ago.
Adjusted to exclude inventory gains and one-time items, earnings fell 13 percent to 58 cents per share. Revenue rose to $21.9 billion, from $16.8 billion in the year-ago quarter.
Net profit in corn processing tumbled 48 percent to $179 million, while earnings slid 28 percent to $221 million in oilseed processing. Other businesses, including cocoa processing and wheat milling, posted a net profit of $55 million, reversing a loss of $16 million a year ago.
The company's agricultural services segment, which buys, sells, stores and ships farm products and is the largest in terms of revenue, saw net profit nearly double to $244 million, from $143 million a year earlier when profit fell unexpectedly due primarily to government-imposed grain export bans by drought-hit Russia and Ukraine.
(Reporting by Karl Plume in Chicago, editing by Gerald E. McCormick, Maureen Bavdek and Matthew Lewis)