KANSAS CITY (B)--Agribusiness giant Archer Daniels Midland reported a 6% decline in fiscal fourth-quarter profits July 23, falling short of Wall Street's expectations as high energy costs weighed on profitability.
The Decatur, IL, company earned $56.1 million during the June-ending quarter, down from $59.6 million a year ago. On a per-share basis, profits of 9 cents were equal with a year-ago when the company had more shares outstanding, but fell short of the 17 cents predicted by analysts in the First Call/Thomson Financial survey.
Energy costs were up $40 million from last year's fiscal fourth quarter, the company said. Additionally, ADM noted a 2-cent-per-share loss related to private equity fund investments and a 3-cent-per-share loss on marketable securities transactions.
Sales rose 9% during the quarter to $5.3 billion.
The company noted improved oilseed crush margins along with improved ethanol and grain handling and merchandising results during the quarter. The gains, ADM said, were partially offset by weakness in corn sweeteners and wheat milling.
Earnings from operations rose to $174 million from $32 million a year ago including a one-time $108 million charge related to asset abandonments and write-downs in last year's fiscal fourth quarter.
"ADM's earnings from operations grew in the fourth quarter despite the negative impact of significantly higher energy costs," Allen Andreas, chief executive, said in a press release. "This growth demonstrates the fundamentals of our core businesses are improving."
The nation's largest ethanol producer said during Monday's conference call that it is looking to expand production capacity of the corn-based fuel.
ADM will add about 50 million gallons of production to a facility in Peoria, IL, and said it is "examining every opportunity" to expand operations at current facilities.
That examination comes after the Bush administration last month rejected a request from California that would have exempted the state from federal clean air rules mandating oxygen additives in gasoline.
California sought the federal waiver after discovering the only other feasible oxygenate, methyl tertiary butyl ether, was contaminating groundwater supplies.
Barring further developments, California is expected to see its ethanol use rise by nearly 600 million gallons annually.
ADM officials said it will move much of its ethanol from the central U.S. to the West Coast on boats, making the Mississippi River "our ethanol pipeline."
In late trading Monday, ADM shares were off 0.47 at 13.38. The decline put the stock at its lowest level in almost three weeks.