Archer Daniels Midland Q2 Profit Down 21%

(RTTNews) - Grain processor Archer Daniels Midland Co. (ADM) on Tuesday reported a 21 percent decline in profit for the second quarter from last year, reflecting flat sales and one-time charges that include an increased provision for a legal matter.

The company's oilseeds processing segment reported a 3 percent decrease in sales for the second quarter to $9.34 billion. Operating profit also declined 3 percent to $321 million as stronger crushing and origination profits were offset by lower cocoa results.

In corn processing, net sales rose 29 percent to $3.64 billion and operating profit tripled to $223 million, reflecting improved ethanol conditions.

Agricultural services revenue declined 6 percent to $9.53 billion and operating profit declined 34 percent to $81 million. The results were impacted by lower U.S. origination volumes and weaker international merchandising results.

Archer Daniel Midland's second-quarter net earnings attributable to the company was $223 million or $0.34 per share, down from $284 million or $0.43 per share in the same period last year.

The latest quarter's results include pretax LIFO charges of $0.04 per share, foreign currency hedging losses related to Australian grain handler GrainCorp's acquisition of $0.05 per share, and additional provisions of $0.03 per share related to a Foreign Corrupt Practices Act or FCPA matter.

The FCPA charge relates to an estimated provision for settlement with the government agencies pertaining to potential violations of anti-corruption practices.

ADM said it has been in talks with the U.S. Department of Justice as well as the U.S. Securities and Exchange Commission regarding the previously disclosed FCPA matter dating back to 2008 and earlier. Based upon recent progress in these talks, ADM has more than doubled its provision from the preceding first quarter to $54 million.

Excluding thes items, adjusted earnings per share for the quarter were $0.46, compared to $0.38 in the same period last year. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.

Adjusted earnings per share increased primarily due to higher segment operating profit. Segment operating profit was $647 million, up 19 percent from the prior year.

Net sales and other operating income for the quarter declined less than 1 percent to $22.54 billion from $22.68 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $22.87 billion for the quarter.

ADM Chairman and CEO Patricia Woertz said, "Looking ahead, we'll be managing through tight crop supplies until the forecast large but delayed U.S. harvest."

ADM said it has made strong progress toward its goal of $200 million in additional cost reductions by the end of 2014.

In Tuesday' regular trading session, ADM is trading at $37.77, down $0.09 or 0.24 percent on a volume of 396,085 shares.