US agricultural giant Archer Daniels Midland (ADM) today reported strong results for the first half of the year, saying its performance takes it further towards its strategic goal.
Net sales for the three months ended December 31 2006 reached almost $11bn, up 18 percent from the previous year, while sales for the six-month period rose 14 percent to $20.4bn.
"We had record results for the quarter and six months. We are particularly pleased with the strong performance from all segments. And we continue to make progress along our strategic path. Our future opportunities are great," said ADM chief executive officer and president Patricia Woertz.
Segment operating profit increased $243m to $767m for the quarter. The six months saw a $541m increase to a total of $1.4bn.
ADM's Oilseed Processing segment saw increased operating profits primarily due to improved gross margins, reaching $192m and $362m for the quarter and six months respectively, an increase of $64m and $134m.
Corn Processing operating profits increased $99m to $335m for the quarter and increased $253m to $626m for the six months. Increased starch, sweetener and ethanol selling prices contributed to the earnings improvement and were partially offset by increasing net corn costs, said the firm. Results included $15m of employee severance costs associated with the closure of a citric acid plant.
Agricultural Services operating profits increased $29m to $123m for the quarter and increased $121m to $234m for the six months due principally to improved earnings of global grain merchandising operations and improved operating results of transportation operations, said ADM.
Other segment operating profit increased $51m to $117m for the quarter and $32m to $193m for the six months.
Net earnings for the quarter were $441m, compared to $ 368m last year. Net earnings for the six month period were $844m, up from $554m.
In November, ADM announced a global growth strategy designed to boost its position in agricultural processing, including expansion in its cocoa processing business. The move is an attempt to "capitalize on the exceptional opportunity ahead", as global demand increases for both food and fuel, Woertz had said at the time.
The firm identified three strategic areas that it said offer the highest potential for significant, value-added growth: expansion of the geographic scope of its core model, diversification of its feedstocks and growth of its BioEnergy business. Key to the growth drive will be technology and innovation.
And just yesterday the company announced the sale of its Arkady and distilled monoglycerides businesses to Caravan Ingredients, owned by Dutch bakery ingredients firm CSM.
The sale, at $55m, included the division's product lines, such as bakery enhancers, mixes, enrichments and distilled monoglycerides, as well as the existing customer base, brands, trademarks and other intellectual property associated with the business. No physical assets were included in the sale.
ADM said the move was designed to streamline its operations and focus on its core areas of expertise.