Higher corn costs slash ADM earnings

DECATUR, Ill. -- The drought is starting to take its toll on the earnings of companies in the nation's agribusiness industry.

Archer Daniels Midland, which has significant corn processing operations in Cedar Rapids and Clinton, on Tuesday reported a 25 percent drop in net earnings for the quarter that ended June 30.

The Decatur, Ill.-based agribusiness giant posted earnings of $284 million, or 43 cents per share, for its fiscal fourth quarter, down from $381 million, or 58 cents per share, for the final quarter of fiscal 2011.

Net sales slipped to $22.7 billion from $22.9 billion in the same quarter last year.

ADM said corn processing operating profit was $74 million, a decrease of $48 million from $122 million in the same period last year. Bioproducts results in the quarter decreased $172 million to a loss of $61 million.

The company said significantly weaker ethanol results more than offset improvements in other bioproducts businesses. Industry ethanol replacement margins were negative throughout the quarter, as the industry supply continued to exceed demand.

ADM Agricultural Services' operating profit was $123 million, down $222 million from the same period a year earlier. Merchandising and handling earnings fell $152 million to $30 million due to lower U.S. corn supplies, which reduced North American export volumes.

In its oilseeds business segment, ADM recorded a fourth quarter operating profit of $331 million, down $118 million from the same period last year. Significantly improved South American soybean and origination results were offset by lower North American softseeds crushing margins.

"In a challenging fourth quarter, solid results from our global oilseeds business, particularly in South America, were more than offset by negative U.S. ethanol margins and weaker U.S. merchandising results,” said ADM Chairwoman and CEO Patricia Woertz.

"As we look ahead, while drought has reduced the potential size of the U.S. corn crop, we are tracking the development of other crops in North America and Europe."

For the fiscal year that ended June 30, ADM posted net earnings of $1.2 billion, or $1.84 per share, compared with $2 million, or $3.13 per share, in fiscal 2011. Sales rose to $89 billion from $80.7 billion a year earlier.