Archer Daniels Midland unveiled a 27% drop in earnings as a hefty charge related to GrainCorp, the subject of an ill-fated bid attempt, overshadowed a sharp boost to grain processing profits from a tumble in corn prices.
US-based Archer Daniels Midland – with Bunge, Cargill and Louis Dreyfus one of the ABCD group of agricultural trading giants – revealed in its results for the October-to-December quarter a $155m hit against GrainCorp, the Australian grain handler for which it launched a failed $3.1bn bid.
Australian officials blocked the deal, which GrainCorp had agreed to, in November, more than a year after ADM launched its takeover attempt.
Although ADM failed to detail the make-up of the charge, the group's increase in its GrainCorp stake to 19.9% - through purchases in October 2012 at Aus$11.75 a share and December 2012 at Aus$12.20 a share – has proved a poor investment.
The shares closed in Sydney on Tuesday at Aus$7.58.
The loss on the GrainCorp stake, which contrasted with a $62m gain taken a year before, overshadowed a sharp improvement in operating profit, driven by improved performances in biodiesel operations in Europe and North America, and by the corn processing division.
Lower corn prices, which tumbled by 40% over 2013 in Chicago's futures market, "and improved ethanol margins helped support a significant improvement in our corn business," said Patricia Woertz, the ADM chairman and chief executive.
Profits from making sweeteners, such as high fructose corn syrup, and starches from the grain soared 60% to $181m, "as net corn costs improved dramatically and overall demand remained seasonally solid", the group said.
The ethanol operation reported a $134m profit, compared with a $94m loss in the last quarter of 2012, "with strong domestic and international demand for ethanol driving significantly improved margins", ADM said.
US ethanol exports in November, the latest monthly figure available, hit a 20-month high of 1.96m barrels, according to the Energy Information Administration, and indeed have attracted criticism of unfair practices among European Union producers.
However, the lower corn price was not all a benefit to ADM, with a reluctance by US growers to sell at values around their lowest in three years hurting the group's profits from agricultural services.
Earnings in marketing and handling tumbled by 35% to $84m, "impacted by the slow farmer selling of corn", Ms Woertz said.
The group's cocoa business, which is up for sale, also fell $10m into the red, compared with a $36m profit a year before, although this reflected "negative mark-to-market timing effects", from pricing stocks to prevailing values.
"The underlying cocoa business has improved," ADM said.
Group earnings tumbled 27% for the quarter to $374m, on revenues down 3.1% at $24.1bn.
Earnings per share came in at $0.56, below market hopes of a $0.85-a-share result.
However, excluding one-off effects such as the GrainCorp charge ADM reported a result ahead of expectations, at $0.95 a share.
ADM shares stood 3 cents lower at $38.88 in lunchtime deals in New York.