Archer Daniels Midland reported a more-than-doubling in
earnings, a bigger increase than investors had expected, helped by strong
volumes, which boosted transportation takings besides, through lower margins, increasing
The US-based group – with Bunge, Cargill and Louis Dreyfus
one of the ABCD of large agricultural trading houses – reported earnings of
$533m for the April-to-June quarter, up from $223m a year before.
The rise - which came despite a fall of 4.7% to $21.49bn in
revenues, thanks to lower crop prices – lifted underlying earnings per share to
$0.77 from $0.46 a year before, and ahead of the $0.73 per share that Wall
Street had expected.
And it reflected in particular the continuing impact of strong
US crops last year, both in providing more volumes for its handling operations,
and in lowering crop prices, so improving margins for consumption operations,
such as crushing and milling.
"The ADM team continued to execute very well, "said Patricia
Woertz, terming the results "strong".
"We capitalised on robust ethanol demand, a recovery of US
grain export volumes and continuing strong demand for oilseeds products."
In ethanol, ADM's profits soared 45% to $141m, "driven by
strong demand and good margins", comments echoing those from Valero Energy last week.
US ethanol production has proven unusually strong, thanks to
lower corn costs and resilient prices of the biofuel, with national output
hitting a record high of 972,000 barrels a day in mid-June, and remaining
In agricultural services, ADM profits jumped 51% to $203m, helped
by "strong US export volumes" and "continued improvement in international
merchandising", signalling recovery at the Toepfer division which the group
took sole ownership of in June, after France's Union InVivo sold out for E83m.
ADM reported "good volumes and margins" in oilseeds crushing
too in the Americas, but operating profits in oilseeds overall rose by an
underlying $18m to $328m, held back by the reluctance by farmers to price crop,
a trend highlighted by rival Bunge last week.
ADM admitted "lower results from South American origination
amid slower farmer selling".
In Argentina, the threat to the peso from the country's
default on debt payments to hedge funds is reported to be fuelling a reluctance
among growers to sell crops which, in being linked to the dollar, represent a
hedge against depreciation in the local currency.
Meanwhile, In Brazil, corn prices have fallen below levels
guaranteed by the government, encouraging many growers to hoard crop in hope of
the state renewing its purchase programme.