ADM Profit Falls on Charges, Slow Corn Selling --Update

By Jacob Bunge 

Archer Daniels Midland Co. plans "aggressive" steps to improve its grain-trading division after the unit contributed to a 27% decline in fourth-quarter earnings, executives said Tuesday.

The commodities company is reviewing its international grain merchandising operations, while supplies of U.S. grain showed signs of loosening up in recent weeks, which should help its domestic results, executives said.

"We fumbled, and we will correct that," Chief Operating Officer Juan Luciano told analysts on a post-earnings conference call. "We are implanting aggressive actions to improve results."

Mr. Luciano said ADM has deployed officials from the company's U.S. headquarters to tighten up overseas grain-trading procedures and has replaced some personnel in the unit.

Decatur, Ill.-based ADM, one of the world's largest traders and processors of grain, oilseeds and other commodities, reported a profit of $374 million, or 56 cents a share, down from $510 million, or 77 cents a share, a year earlier.

Earnings from grain trading dropped about one-third to $84 million from $129 million a year earlier, while earnings from ADM's corn-processing business surged to $279 million, compared with $3 million a year earlier.

Last autumn's record U.S. corn harvest has been a mixed blessing for ADM. A roughly 40% decline in the price of corn bolstered margins for its businesses that process crops into products such as ethanol and sweeteners. But the price drop also prompted farmers to stash more corn into storage bins rather than sell it at sharply lower prices.

Farmers in January began selling more grain as they prepared for the 2014 planting season, Mr. Luciano said.

Meanwhile, ADM will press ahead with a "significant review" of its overseas grain trading operations, where Mr. Luciano said the company ran into difficulties buying and selling grain across South America, Asia and Eastern Europe.

ADM also remains on the lookout for deals despite the Australian government blocking its proposed 3 billion Australian dollar (U.S. $2.7 billion) purchase of Sydney-based grain merchant GrainCorp Ltd., over fears the deal would give too much control of Australian agriculture to a foreign-based entity. The November ruling dealt a blow to ADM's plans to sell more grain and commodities into China and other rapidly expanding Asian economies.

The failed deal with GrainCorp, in which ADM still maintains a 19.9% stake, drove $155 million worth of impairment charges in the fourth quarter, the company said. Patricia Woertz, ADM's chief executive, said Tuesday the company has no plans to sell its position.

ADM is considering other potential "consolidation plays," Mr. Luciano said, as well as possibly purchasing "specialty products" that would fit in with ADM's existing agricultural offerings.

Excluding items such as deal-related charges, ADM's adjusted earnings rose to 95 cents from 60 cents, topping analysts' expectations.

Revenue decreased 3.1% to $24.14 billion.

Write to Jacob Bunge at [e-mail]

Tess Stynes contributed to this article.

Order free Annual Report for Advanced Micro Devices, Inc.

Visit http://djnweurope.ar.wilink.com/?ticker=US0079031078 or call [phone]

Order free Annual Report for Archer Daniels Midland Co.

Visit http://djnweurope.ar.wilink.com/?ticker=US0394831020 or call [phone]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires