UPDATE: ADM Upbeat On US Harvest As 1Q Net Drops 53%
(Updates throughout with conference-call comments, share price)
By Doug Cameron
Of DOW JONES NEWSWIRES
The head of Archer Daniels Midland Co. (ADM) said Tuesday that she remained
optimistic that U.S. farmers could bring in a late harvest despite poor weather
that has raised fears of reduced supply and yields.
Pat Woertz, chairman and CEO of the U.S. agribusiness group, also pointed to
firming demand, notably in export markets.
"We do see demand up in some key markets," said Woertz on a conference call
after ADM reported a 53% drop in fiscal first-quarter profit, weighed by lower
commodity prices.
Woertz remained optimistic about ADM's ethanol business, a key driver of
earnings over the past two years. The segment was profitable in the latest
quarter - excluding inter-company accounting costs - and producers hit by weak
pricing are looking to a key U.S. government ruling next month on its use as a
gasoline additive to boost demand.
However, the late U.S. harvest is also being closely monitored by the
agribusiness sector as wet conditions and the onset of winter threaten corn and
soybean supplies.
ADM executives pointed to the ability of farmers to pull crops from the ground
quickly when weather conditions allow, though noted they were seeing more "
damaged" corn.
The company is also boosting its capacity to dry and store wet crops.
ADM reported a profit of $496 million, or 77 cents a share, in the quarter.
This compared with a profit of $1.05 billion, or $1.62 a share, a year earlier.
Net sales decreased 29% to $14.9 billion amid lower average selling prices and a
negative foreign exchange impact. Gross margin fell to 6.5% from 8.8%.
"We are executing on our growth strategy," said Woertz, pointing to the
potential for "fill-in" deals to expand its global footprint handling,
transporting and processing a range of foodstuffs.
ADM shares were recently up about 5% at $31.99.
-Doug Cameron, Dow Jones Newswires; 312 750 4135; doug.cameron@dowjones.com
(Tess Stynes contributed to this article)
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