DECATUR, ILL. — Improved results in the company’s flour milling business was more than offset by lower results in the remaining parts of the Other division of Archer Daniels Midland Co. in the first quarter ended Sept. 30. Quarterly operating income was up for the ADM Corn Processing and Oilseeds Processing segments.
ADM net income in the quarter totaled $345 million, equal to 54c per share on the common stock, down 30% from $496 million, or 77c per share, in the first quarter of fiscal 2010.
Net sales were $16,799 million, up 13%.
Patricia Woertz, ADM chairman and chief executive officer, said strong global demand makes her confident about the company’s prospects.
“The ADM team performed solidly in both corn and oilseeds with both businesses well positioned to meet demand,” she said. “Agricultural Services results were impacted by crop supply shifts early in the quarter. As we look at markets today, global demand is generally strong. This presents ADM with the opportunity to grow shareholder value by doing what we do best: use our assets and our acumen to connect crops from regions where they’re available to markets where they’re needed.”
The Other segment, which includes wheat milling, cocoa processing and the company’s minority interest in Gruma S.A.B. de C.V., sustained a first-quarter operating loss of $16 million, versus a $127 million profit in the same period last year.
Processing alone saw an $81 million decrease in profits. Results included mark-to-market losses of $59 million, versus gains of $17 million in the first quarter last year. The change reflected “certain forward purchase and sales commitments accounted for as derivatives,” ADM said.
ADM attributed the remaining $62 million in operating earnings decline to higher captive insurance loss provisions, principally due to a settlement in connection with a 2008 fire and explosion at the company’s export elevator located in Destrehan, La.
The company is in the process of working with its reinsurers and expects to recover a significant part of these losses over the next 12 months.
Wheat and cocoa processing volumes were 1,885,000 tonnes in the first quarter, down 1% from the first quarter last year. Sales were $1,627 million, up 23%.
Corn Processing operating income in the first quarter was $341 million, up 81% from $188 million. Volume was 5,834,000 tonnes, up 26%. Sales were $2,178 million, up 14%.
Operating profits for sweeteners and starches were down $48 million from the prior year to $146 million. Average selling prices were lower, and the decline was not fully offset by lower net corn costs. Sales volumes grew, boosted by strong export demand and better domestic demand for industrial starches.
Bioproducts profits were strong, in contrast with the loss last year. Improved ethanol and lysine margins and favorable corn ownership position and higher ethanol volumes boosted profits. The company recorded a $32 million charge from costs related to the start up of new plants.
Oilseed Processing operating income was $308 million, up 8% from $284 in the first quarter of fiscal 2010. Processing volume was 6,794,000 tonnes, up 7%. Sales were $6,460 million, up 2%.
In oilseed processing, crushing volumes rose more than 6% from the first quarter last year. Margins improved.
Agricultural Services operating income was $132 million, down 25% from $175 million in July-September 2010. Net sales were $6,534 million, up 23%.
“Merchandising and handling profit decreased from last year, due primarily to negative impacts from supply shifts early in the quarter as a result of drought conditions and government actions in the Black Sea region,” ADM said. “These negative impacts were only partially offset by a $65 million insurance settlement related to ADM’s Destrehan, La., export elevator and by increased volumes driven by the early U.S> harvest. Earnings from transportation operations improved on higher barge–freight rates and volumes which were also driven by the early U.S. harvest.”