Rising corn costs eat into ADM profits

Archer Daniels Midland Co. reported net earnings up 33 percent in its  first fiscal quarter, as onetime adjustments countered a drop in margins on the company's corn processing and oilseeds.

ADM reported net earnings of 68 cents per share, up 26 percent from the first quarter of last year, and total earnings of $460 million, a 33 percent improvement.

Adjusted earnings per share, which excluded a onetime inventory adjustment gain of 11 cents per share and debt exchange costs of one cent per share, fell 13 percent from the year-earlier quarter, to 58 cents per share.

ADM said its corn processing profit dropped $162 million, as corn costs more than doubled from the prior year. The company said its net corn costs were worsened by hedging benefits in previous quarters.

Profits from the company's oilseed processing fell $87 million, the company said, however profits from the company's Agricultural Services business increased $112 million, helped by a  strong recover in exports from the Black Sea region.

ADM closed down a soybean processing plant in Galesburg, Ill., during the quarter, consolidating production to more efficient operations. The company also bought a majority stake in a leading Polish manufacturer of refined vegetable oils, fats and biodiesel.

Chairman and CEO Patricia Woertz said the quarter "presented a difficult and challenging market environment."

"Margin conditions in our global oilseeds segment were generally weak and net corn costs were high," Woertz said in a prepared statement. "We offset some of these pressures with good management of our commodity positions and by capturing opportunities through our broad and diverse portfolio."

ADM operates a major corn milling complex in Cedar Rapids, producing food ingredients and ethanol.