Archer-Daniels-Midland Co., the world’s largest corn processor, reported third-quarter earnings that missed analysts’ estimates as ethanol margins shrank and the stronger dollar curbed U.S. exports of the grain.
Earnings excluding one-time items were 60 cents a share, Chicago-based ADM said in a statement Tuesday, trailing the 70-cent average of 11 analysts’ estimates compiled by Bloomberg. Sales fell to $16.6 billion from $18.1 billion a year earlier, compared with the $17.5 billion average estimate. The shares fell the most in six years.
ADM said corn-processing operating earnings fell 62 percent as its ethanol business suffered from “strong” industry production and high inventory levels. “We continue to confront very weak industry ethanol margins,” Chief Executive Officer Juan Luciano said in the statement.
Among the company’s other businesses, both oilseeds and the Wild Flavors and specialty ingredients posted higher earnings. Agricultural services, which is ADM’s largest segment by revenue, saw profit fall 52 percent, largely because of a one- time $156 million gain a year earlier. The unit also saw slightly lower income from the merchanting and handling of agricultural commodities.
North American corn and wheat exports were less competitive in the period, the company said. Ample global grain supplies and Brazilian farmers motivated to sell because of the weaker real limited the competitiveness of North American exports. That also lowered barge freight rates in North America, reducing ADM’s earnings from transportation.
While ADM has tried to expand its geographic footprint in recent years, particularly to serve growing markets in Asia, most of its long-term assets are still located in the U.S., according to data compiled by Bloomberg. Exports of corn from Sept. 1, when the 2015-2016 marketing year began, through Oct. 22 fell 28 percent from a year earlier, according to the U.S. Department of Agriculture.
ADM’s net income was 41 cents a share in the quarter, down from $1.14 a year earlier. The shares fell 8.9 percent to $42.18 at 9:46 a.m. in New York. They earlier dropped as much as 9.2 percent, the most intraday since May 2009.