Grain processing giant Archer Daniels Midland (ADM) has seen its second quarter profit shrink 89% on higher corn costs and lower oilseed earnings, although sales have grown, the company said on Tuesday.
For the second quarter ended December 31, ADM reported net profit of $80m or $0.12 a share, down from $732m or $1.14 a share for the same period last year. Meanwhile, net sales were up 11% to $23.3bn, from $20.9bn a year earlier, the company said.
“It was a tough quarter,” ADM chairman and CEO Patricia Woertz said in a statement. “The operating environment was challenging. Ongoing weakness in global oilseeds margins, lower results in corn and poor international merchandising results hurt our second quarter profits.”
The results were much lower than analysts’ expectations, with those polled by Thomson Reuters I/B/E/S having forecast earnings of 76 cents per share, compared to the 51 cents per share the company reported after one-time items and charges.
ADM saw corn processing profit fall $532m, including a $339m charge related to a renewable plastic production facility in Clinton, Iowa.
Meanwhile oilseeds processing profit fell $72m during the period, and earnings for sweeteners and starches fell 39% to $73m. The company said that export demand for sweeteners remained strong, but margins were squeezed as higher net corn costs more than offset higher average selling prices and increased sales volumes.
ADM said on January 11 that it intends to cut 1,000 jobs from its global workforce, in an effort to save about $100m a year. It said it the job cuts are likely to cost about $50m to $75m as a pre-tax charge in the third quarter of 2012, but the full cost reduction benefit should be realized by the end of the third quarter of fiscal 2013.