Company update: ADM profits plunge by 53%
Archer Daniels Midland Co. said that its first-quarter profit dropped 53% as the global recession dragged down demand for crops and ethanol, but demand is improving in some key markets.
Patricia Woertz, the company's chairman and CEO, said sales improved from the first half of 2009, and the company was seeing some stronger demand as the US economy pulls out of recession.
ADM said it earned $496 million compared with $1.04 billion last year.
Revenue fell 29% to $14.92 billion from $21.16 billion, dragged down by declines in commodity costs. But sales volumes remained steady.
Crop and ingredient prices have fallen significantly from this time last year when a global food shortage had pushed commodity prices to record highs.
Extra grain dryers
Prices strengthened this fall as wet weather delayed the harvest of corn and soybeans. Woertz said the company is positioning itself to profit from the wet harvest by installing industrial dryers at eight of its grain elevators.
That could increase the amount of corn sold to it rather than competing processors, she said, and boost its revenue this year.
Woertz didn't specify which sectors of the company were seeing stronger demand this quarter, but it appears the ethanol segment is gaining steam, analysts say.
ADM is one of US’ biggest ethanol producers, but it doesn't break out its ethanol results separately. The division that includes ethanol production lost $6 million during the first quarter, down from a profit of $53 million the year before.
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