May 1, 2018 / 11:08 AM / 3 months ago

ADM profit rises on higher soy processing margins

(Reuters) - Archer Daniels Midland Co (ADM.N) on Tuesday reported a 16 percent increase in quarterly profit, as the U.S. grains merchant highlighted higher margins for and record volumes of soybean processing in North and South America.

The Chicago-based company said the spike in soybean processing volumes, which happened as it pushed to lock in stronger profit margins, was not immediately showing up as higher profits because of losses ADM faced on its forward hedges. ADM said that was expected to reverse later in 2018.

ADM’s adjusted earnings for the three months ending March 31, which increased to 68 cents per share, up 13 percent from the same period a year earlier, were bolstered by U.S. tax changes and biodiesel tax credits, company officials said.

But the company also forecast the trade dispute between the United States and China would impact its business in the coming months. ADM expects a negative impact of about $30 million in the second quarter due to Beijing’s decision to impose stiff anti-dumping tariffs on sorghum, Chief Executive Juan Luciano said on an analysts’ call on Tuesday.

ADM, one of the largest exporters of U.S. sorghum to China, has threatened legal action against China after several of its sorghum shipments were caught up in the dispute. The company said it was selling sorghum to ethanol producers.

Revenue from ADM’s oilseed business, which makes up 36 percent of its overall revenue, rose 7.8 percent to $5.63 billion in the first quarter. Net profit attributable to ADM rose to $393 million, or 70 cents per share, from $339 million, or 59 cents, a year earlier.

Total revenue rose 3.6 percent to $15.53 billion.

Additional reporting by Akshara P in Bengaluru; Editing by Jonathan Oatis and Paul Simao

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