ADM Reports a Profit Drop Due to High Corn Prices


ADM Reports a Profit Drop Due to High Corn Prices

Full Description


Company: Archer Daniels Midland Co.

Food Ingredients – Industrial Wholesale Bulk Supplier

Archer Daniels Midland Co. reported a 15%  drop in quarterly profits, lower than expected, as high grain prices tightened the company’s corn processing business, thus driving up costs to make starches and other food ingredients.

Profit from making ethanol was up sharply amid high oil and fuel prices, but that came at the expense of other businesses, including sweeteners and starches, that also rely on corn, based on an Aug. 2 ADM statement.

Operating profit in ADM’s corn processing unit, which includes its ethanol distilleries as well as food and livestock feed production, fell 16 percent, to $118 million, during the quarter ended June 30, the company said in the statement. While processed volumes increased 15 percent, net corn costs “increased significantly” from a year earlier, ADM said.

Within corn processing operations, operating profit in sweetener and starch production plunged 92 percent, to $9 million, as higher average selling prices and sales volumes were more than offset by higher net corn costs, ADM said. Profit in bioproducts more than quadrupled, to $109 million, on higher ethanol prices

ADM’s results underscore an intensifying “food-versus-fuel” debate, in which the U.S. ethanol industry has come under increasing criticism as corn prices doubled over the past year. Some blame ethanol for driving up prices for meat, milk and other foods, and the Senate recently agreed to end a federal tax credit paid to fuel makers for blending the additive in gasoline.

ADM’s net earnings for the three months ended June 30, at $381 million, compare to profit of $446 million during the same period a year earlier. For the 12 months ended June 30, ADM’s fiscal 2011, the company had net revenue of $81 billion.

 

Source – DHN

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Category