Archer Daniels Midland Earnings Fall on Record Ethanol Production

Archer Daniels Midland Co. said its earnings fell more than expected in the second quarter, as record ethanol production limited profits.

The Chicago-based company buys oilseeds, grains and other commodities from farmers to make into ingredients that it then sells to food producers. ADM has sought to focus more on higher-margin businesses, such as specialty ingredients and flavorings. In December, the company agreed to sell its global cocoa business to Olam International Ltd. as it exits the volatile cocoa sector.

"In corn, domestic and export demand for ethanol was robust, but record industry production limited margins. This was partially offset by strong results from our corn sweeteners and starches business," said Chief Executive Juan Luciano.

Profit for the company's corn-processing business fell to $204 million from $338 million a year earlier.

Mr. Luciano added that the oilseeds segment had performed well.

ADM's oilseeds-processing business reported an operating profit of $344 million, up from $280 million.

However, the agricultural services segment was hurt by "lower margins and volumes of North American exports, as they were less competitive globally, and by a sharp upward move in commodity prices at the end of the quarter," he said. Agricultural services operating profit fell to $152 million from $184 million.

Overall, the company posted earnings of $386 million, or 62 cents a share, down from $533 million, or 81 cents a share, a year earlier.

Excluding special items, per-share earnings were 60 cents, down from 79 cents a year ago.

Revenue fell to $17.19 billion from $21.49 billion.

Analysts had projected per-share earnings of 66 cents and revenue of $20.87 billion.

Shares, inactive premarket, have fallen 8% this year through Monday's close.

Write to Angela Chen at [e-mail]

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