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 U.S.
Net income fell to 39 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 $14.4 billion, trailing the $16.9 billion average estimate.
U.S. 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.
The agricultural services unit’s operating profit fell 61 percent, with its global trading desk posting a loss for the quarter compared with a profit a year earlier.
While ADM’s sweeteners and starch business, part of the corn processing segment, had a "strong" performance, ethanol margins were lower. Oilseeds-processing profit was down as increased crushing of soybeans in Argentina weakened margins globally.
Like his counterpart at rival trader Bunge Ltd., which also reported earnings last week, ADM Chief Executive Officer Juan Luciano also sees a shift to more positive market conditions later this year.
"The first half of the year continues to present a challenging environment," Luciano said in the statement. "However, we are cautiously optimistic that reduced South American soybean and corn production could bring improved soybean crush margins and merchandising opportunities in the second half of the year.”
The shares were unchanged from yesterday’s close, trading at $40.26 at 8:46 a.m. in New York before the market opens.