Agricultural processing giant Archer Daniels Midland (ADM) has reported a huge boost in net profit during the third quarter, although lower prices for sweeteners and starches reduced earnings from corn processing.
For the quarter ended March 31, the company reported a profit of $421m, up from just $3m for the same period last year. Revenue rose two percent to $15.1bn, up from $14.8bn last year. ADM attributed most of the rise in earnings to increased demand for corn products for ethanol, and also said that grain prices have shown some signs of strengthening.
ADM’s chief executive Patricia Woertz said: “In the third quarter, the ADM team did a good job managing our large, flexible origination and processing network to meet global demands.”
Corn processing results increased on higher ethanol margins, with profits of $55m for the quarter and $386m over the past nine months.
However sweeteners and starches profit fell by $101m from the previous year to $45m.
“This decrease reflects lower average selling prices that were only partially offset by lower net corn costs,” the company said in a statement. “These net corn costs were significantly impacted by mark-to-market losses and hedge accounting ineffectiveness related to corn futures.”
A short South American soybean crop last year had a favorable impact on ADM’s soybean oil results, as there was higher demand for North American soybeans, which translated into improved merchandizing and handling profits, the company said. The segment’s operating profit jumped $181m in the quarter to $405m.
ADM’s other business segments, including wheat and cocoa processing, recovered from a net loss of $140m in the third quarter last year, to turn a profit of $22m in Q3 2010. The company opened a cocoa processing plant in Ghana in October, with the intention of boosting its ability to provide cocoa products from a single source.