Global grain glut squeezes ADM’s quarterly profit

Source: By Tom Polansek, Reuters • Posted: Wednesday, November 1, 2017

Oct 31 (Reuters) – U.S. agricultural trader Archer Daniels Midland Co on Tuesday reported a smaller-than-expected quarterly profit as its core businesses of selling and processing grains took a hit from a glut in the global grain market.

A bumper grain and oilseeds harvest has squeezed profits for ADM and rivals Bunge Ltd, Cargill Inc and Louis Dreyfus Co, collectively known as the ABCD quartet of global grain trading giants.

“The operating environment in our Ag Services and Oilseeds businesses was more challenging than anticipated,” ADM Chief Executive Juan Luciano said in a statement.

Profit in its agricultural services unit, ADM’s biggest, more than halved to $87 million in the third quarter ended Sept. 30, falling well below $142 million estimated by JPMorgan analysts.

Its profit from oilseeds business fell 18 percent to $119 million.

ADM and its rivals have been investing in higher-margin businesses such as food ingredients and natural flavorings to make up for a slump in their core grain trading and processing operations.

Earlier this month, the company said it would make further investments in its Straubing crushing plant in Germany to produce more high-protein soymeal free of genetically-modified organisms.

Net profit attributable to ADM fell to $192 million, or 34 cents a share, in the latest quarter from $341 million, or 58 cents a share, a year earlier.

Excluding items, ADM earned 45 cents per share, missing the average analyst estimate of 55 cents, according to Thomson Reuters I/B/E/S.

Revenue for the Chicago, Illinois-based company fell 6.3 percent to $14.83 billion.

Shares of the company were down 3.3 percent at $41.40 in premarket trading. (Reporting by Tom Polansek in Chicago and Ahmed Farhatha in Bengaluru; Editing by Anil D‘Silva)