ADM punished in market awash in grain

Source: By The Associated Press • Posted: Wednesday, February 3, 2016

DECATUR, Ill. (AP) — Shares of Archer Daniels tumbled 8 percent Tuesday as rising stockpiles of grain, plunging energy prices, and a strong dollar took a toll on the agribusiness giant.

The company fell short of Wall Street expectations for both profit and revenue and CEO Juan Luciano said the terrible market conditions of last year are likely to persist in 2016.

The strong dollar has made it extraordinarily difficult for Archer Daniels to compete globally, making its corn, soybeans and other products and services more expensive overseas in a market that already has plenty of supply. Its profit fell about 39 percent.

And crude, which was trading for around $30 per barrel Tuesday, has made the company’s corn-based ethanol fuel less competitive against gasoline, with gas prices averaging less than $2 per gallon in the U.S.

The Chicago company had a net income of $718 million, or $1.19 per share, compared with $701 million, or $1.08 a share, from the same period last year.

Removing gains the company made on sales and other one-time costs, however, the per-share profit was 61 cents, compared with $1 last year.

That was a penny less than expected on Wall Street, according to a poll by Zacks Investment Research.

Revenue slumped 21 percent to $16.45 billion, almost $3 billion short of projections from analysts polled by FactSet.

With the dollar as strong as it is, Archer Daniels’ profit from its agricultural services fell to $214 million, down $207 million from last year when the company was recording record grain volumes.

For the year, the company reported profit of $1.85 billion, or $2.98 per share, down from $2.25 billion, or $3.43 per share, last year.

Revenue fell to $67.7 billion, from $81.2 billion last year.

Shares of Archer Daniels Midland Co. fell $2.81 to $32.65 in afternoon trading. The company’s stock has lost about a third of its value in the last 12 months.