ADM's 3rd-Quarter Profit Rises on Accounting Credit -- Update

--Revenue, core earnings slip as 2012 drought leads to lower volumes

--Drought hurt company's ability to procure oilseed, grain for processing

--Record U.S. corn harvest, rising soybean output will boost agricultural-services unit

 
   By Tony C. Dreibus and Nathalie Tadena 
 

Archer Daniels Midland Co. (ADM) on Tuesday said its third-quarter earnings more than doubled, as an accounting credit boosted the U.S. grain processor's results. But revenue and core earnings slipped, as ADM's agricultural-services segment was hurt by lower U.S. volumes.

ADM reported a profit of $476 million, or 72 cents a share, up from $182 million, or 28 cents a share, a year earlier. Total revenue edged down 1.9% to $21.39 billion.

Adjusted earnings, which exclude the accounting credit and other items, fell to 46 cents a share from 53 cents a share a year earlier, the company said.

Analysts polled by Thomson Reuters most recently projected per-share earnings of 47 cents and revenue of $20.62 billion.

ADM, along with other grain traders and processors, struggled to secure soybean and corn supplies in the wake of last year's historic U.S. drought. Oilseed processing in the quarter ended Sept. 30 fell 3.6%, and corn volume declined 7.8%, the Decatur, Ill., company said.

The Department of Agriculture expects U.S. corn production to jump to a record 13.8 billion bushels this year, and soybean output is seen rising 4.4%, refilling inventories and improving the performance of ADM's grain-handling, transportation and processing businesses, Chief Operating Officer Juan Luciano said during a conference call with investors. Last year's drought led to historically low U.S. supplies of corn and soybeans earlier this year.

"As U.S. crop supply dwindled, July and August exports from the Gulf of Mexico were seasonably low," Mr. Luciano said. "As the large harvest began to arrive in September, exports rose to higher-than-average levels. Our international merchandising team had a challenging quarter."

After adjustments for impairment charges, ADM's agricultural-services profit fell by $152 million from last year, as it was hurt by declining U.S. exports. Merchandising and handling earnings fell to $4 million from $104 million, the company said.

Oilseeds-processing profits jumped 7.4% to $361 million, ADM said. Despite tight crop supplies, ADM said its North America oilseed-crushing business had good capacity utilization amid strong foreign and domestic protein-meal demand.

ADM is awaiting full regulatory approval for its planned A$3.4 billion takeover of GrainCorp Ltd. (GNC.AU), Australia's largest grain company, which accepted the offer in April.

The company has received approval from South Africa, Japan, the European Commission and South Korea to go forward with the acquisition, Mr. Luciano said. Australia is expected to make a decision by mid-December on whether to approve the deal, leaving China as the only holdout, he said. ADM wants to close the deal by the end of the first quarter of 2014, Mr. Luciano said.

ADM is bullish on its ethanol unit, which had struggled for several quarters, Mr. Luciano said. Corn processing profits more than doubled in the latest period to $159 million on improved results from ethanol. Expansion of so-called flex-fuel vehicles that run on a blend of 85% ethanol and 15% gasoline, along with increased overseas demand, will continue to boost ADM's ethanol business, Mr. Luciano said.

"Ethanol margins remain positive," he said. "There will be continued ethanol margin volatility, but with the expansion of E85 and exports, we remain confident in our ethanol business," he said.

ADM shares recently rose 4% to $41.28. The stock is up 48% this year.

Write to Tony C. Dreibus at [e-mail] and Nathalie Tadena at [e-mail]

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