ADM reports 83% profit decline; corn processing division battered
The agricultural processing giant said its earnings dropped “on impact of global economic downturn” as it reported a five percent decrease in net earnings over the full year, to $1.7bn.
But its corn processing division was particularly hard hit, with profits down from $961m in the 2008 financial year to $185m this year. This was despite profits of $500m in starches and sweeteners, which the company said it achieved through higher selling prices and lower manufacturing costs, only partly offset by lower demand and higher corn costs.
However, ADM’s corn processing profits were struck hard by lower ethanol prices, the company said.
ADM chairman of the board and chief executive officer Patricia Woertz said: “In the fourth quarter, we felt the impact of the global economic downturn, as we concluded a year of good performance overall. In this downturn, we used our strong balance sheet and cash flow to make strategic investments to build long-term value.”
Those investments include increased oilseeds processing, milling and cocoa processing capacity in North America; adding to its transportation network; and the formation of packaged oils business Stratas Foods with Associated British Foods (ABF).
Improving demand ahead?
Like many of its agribusiness rivals, ADM’s balance sheet has suffered due to the economic downturn, but it sees reason for optimism for the year to come, as it claimed the worst of the downturn is over.
“As we look ahead, we see signs of improving demand in the various food, feed and fuel markets we serve. We remain financially strong and well positioned to capture value as global markets recover,” said Woertz.
Net earnings for the fourth quarter fell to $64m from $372m a year earlier, at which time the company profited from record-high grain prices.
In other divisions, ADM posted a net loss of $17m for agricultural services, compared to a profit of $106m for the same period last year, and fourth quarter profits from its oilseeds processing division fell from $375m in 2008 to $227m.