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ADM shares tumble as earnings miss expectations

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ADM shares dropped as it announed earnings below trader expectations, citing "adverse market conditions," but pledged a boost to dividends and fresh share repurchase.

The food and agribusiness group saw adjusted earnings per share of $0.61 in the three months to December.

This is down 39% from the same period last year, and short of analyst forecasts of $0.65 a share.

Revenues for the period were down 27% year-on-year, to $16.45bn.

"Adverse market conditions that impacted many of our businesses earlier in the year continued through the fourth quarter," said Juan Luciano, ADM chairman and chief executive.

Narrower profits

ADM saw adjusted operating profits of $599m, down 47% from the same period last year, as margins on many of its key business narrowed.

"Global dynamics reduced margins across the US agricultural export sector, the US ethanol industry and in the soybean crushing industry worldwide," ADM said.

The company's revenues were down $16.45bn

Falling ethanol profits

Profits in ADM's corn processing unit plunged by 55% to $126m.

The drop was driven by a sharp fall-off in ADM's biofuel producing bioproducts unit, which saw profits fall to $24m, from $227m.

ADM said the fall in profits came as "steep declines in crude oil prices drove lower ethanol prices".

And with "continued high industry production levels" of the corn based biofuel, industry margins shrunk.

"Headwinds"

"With current headwinds likely to persist, we remain focused on the areas within our control," said Mr Luciano.

ADM pledged a "fresh look at the capital intensity of our operations and portfolio".

The company is aiming to increase its quarterly dividend rate by 7%, to $0.30 a share, and is also targeting a share repurchase of $1.0-1.5bn in 2016.

ADM shares were down 7.7% to $32.73 in morning deals in new York.

By Agrimoney.com

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