Sun, Nov 02, 2003 - Page 11 News List

ADM handily beats expectations with 39% earnings-jump

AP , DECATUR, ILLINOIS

Agri-business giant Archer Daniels Midland Co reported a 39 percent jump in first-quarter net earnings Friday, citing gains from cocoa and lysine processing as well as from private equity investments.

The results handily beat Wall Street's expectations, and an analyst said they show ADM is recovering well after a lengthy slump. The company's shares rose sharply on the news.

Net earnings were US$150.2 million, or US$0.23 per share, compared with US$108.1 million, or US$0.17 per share, for the same period of last year.

That easily exceeded the consensus estimate of analysts surveyed by Thomson First Call, who had expected per-share earnings of US$0.19.

ADM shares rose US$0.78, or 6 percent, to close at US$14.35 on the New York Stock Exchange.

Revenues climbed 19 percent to US$8.27 billion from US$6.94 billion.

The company said wheat processing results improved to US$26 million from US$20 million thanks to improved US crop conditions. Oilseed processing operating profits fell US$8 million to US$68 million because of reduced crush margins in North America and Europe, while corn processing results were marginally higher than last year's strong showing and earned US$85 million.

The biggest single improvement, to US$75 million from US$20 million, was in the division that incorporates both cocoa and bioproducts processing and private equity-fund investments.

The bioproducts unit focuses primarily on lysine -- an amino acid used in animal foodstuffs -- where demand remains strong and prices increased significantly.

The stock gains come from a good performance from ADM's US$400 million investment in privately held agribusiness companies in Latin America, Asia and eastern Europe.

Agricultural services generated US$3 million more operating profits at US$43 million due to what ADM called the balanced performance of its global grain origination and marketing system.

"Market conditions improved across many of our business segments this quarter," said Allen Andreas, chairman and chief executive officer. "Operating profits demonstrated solid increases despite the challenges of dealing with last year's North American drought."

Analyst John McMillin said the results show better trends emerging for the company although it still faces numerous challenges -- including uncertainty over grain and commodity costs, a tax on high-fructose corn syrup in Mexico that is affecting demand, and weaker-than-normal US soybean processing margins.

"For eight years, ADM had been a `sick' company, but today's performance seems to show that the company is recuperating," said McMillin, of Prudential Equity Group.

Decatur-based ADM processes corn, soybeans and wheat for sale to food, beverage and chemical industries. It has over 26,000 employees and more than 270 processing plants.

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