ADM profit disappoints as strong dollar curbs overseas sales

[CHICAGO] Archer-Daniels-Midland Co, the world's largest corn processor, reported first-quarter earnings that missed analysts' estimates as a strong dollar curbed grain exports from the US.

Net income fell to 39 US cents a share from 77 cents a share a year ago, Chicago-based ADM said in a statement on Tuesday. Excluding one-time items, earnings were 42 cents, less than the 45-cent average of 11 estimates compiled by Bloomberg. Sales fell to US$14.4 billion, trailing the US$16.9 billion average estimate.

US corn exports have been less competitive than supplies from Brazil this year because of the dollar, curbing results in the agricultural services segment, ADM's business that buys, stores and transports crops and its biggest by sales.

Weak grain exports are "a negative for ADM" given that its assets are focused on North America, Ann Duignan, an analyst for JPMorgan Chase & Co, said in a report on Monday.

ADM's corn-processing segment has faced lower ethanol margins and declining prices for dried distiller grain with soluble, or DDGS, an ethanol byproduct.

The first-quarter average spread between the cost of corn and the price of ethanol and DDGS in Iowa - an indicator of industry profitability - was about 24 per cent lower than a year earlier and reached a record low in January, according to USDA data.

The lower US soybean crush margin in the quarter curbed profit from the oilseed segment, ADM's biggest by operating income. The soybean crush, a profit measure for US processors of the commodity, slumped amid more supplies coming from Argentina.

BLOOMBERG