U.S. agricultural processor Archer Daniels Midland Co (ADM.N) reported a 27-percent drop in quarterly earnings on Tuesday as charges related to its failed acquisition of GrainCorp overshadowed strength in its corn processing and oilseeds businesses.
The Decatur, Illinois-based company had pursued grain handler GrainCorp for 13 months before Australia's government blocked the deal in November, striking a blow to ADM's plan to expand to meet fast-growing demand in Asia and the Middle East.
Bumper U.S. corn and soybean harvests following an historic drought in 2012 replenished supplies and bolstered profits in ADM's oilseeds and corn processing segments, along with strong demand for ethanol and biodiesel.
But ADM's agricultural services segment struggled to capitalize on the U.S. grain bounty amid slow farmer sales of corn and poor international merchandising results.
"Lower corn costs and improved ethanol margins helped support a significant improvement in our corn business. Our great oilseeds performance was driven by our ability to meet robust demand for meal and by improved biodiesel results in North America and Europe," CEO Patricia Woertz said.
"However, our ag services business was impacted by the slow farmer selling of corn and challenges in international marketing," she added.
ADM is one of the largest U.S. processors of corn and soybeans and one of the world's top ethanol makers.
The company may face challenges in the coming year as the U.S. Environmental Protection Agency considers a proposal to reduce biofuel blending requirements. Investors are also eyeing the company's next move following the failed GrainCorp deal.
For the quarter ended December 31, ADM earned a net profit of $374 million, or 56 cents a share, compared with $510 million, or 77 cents a share, a year earlier, the Decatur, Illinois-based company said.
Adjusted earnings, which excluded GrainCorp-related charges and other items, were 95 cents a share, up from 60 cents a share a year earlier, ADM said.
Analysts on average were expecting earnings of 85 cents per share, according to Thomson Reuters I/B/E/S.
Revenue slipped to $24.1 billion, from $24.9 billion in the same quarter a year ago.
Oilseeds processing profit rose 16 percent to $478 million in the quarter while corn processing earnings surged to $279 million from just $3 million a year ago.
Agricultural services profit fell to $46 million, down $271 million from the same quarter the prior year.
Shares of ADM were up 2.8 percent in premarket trading, after closing Monday at $38.91 per share on the New York Stock Exchange, down 57 cents from the previous session.
(Reporting by Karl Plume in Chicago; Editing by Bernadette Baum)