Archer Daniels Midlands (ADM) has reported an operating profit of $808m for the three months to the end of June, a 9% decline compared with the same period last year. ADM is one of the four ABCD grain traders (ADM, Bunge, Cargill and Dreyfus) that control between 75% and 90% of all the grain traded in the world.
ADM’s earnings (EBIT) for the quarter fell by over $200m to $526m while net profits plummeted by more than 27% to $386m. Revenues for the second quarter fell by a fifth to $17.2bn.
ADM, a major ethanol producer, blamed the weak second quarter results on weak margins as a result of record production from the ethanol industry. As a result of strong demand, corn-based ethanol production in the US soared which pushed down prices, leading to tighter profit margins.
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ADM’s agri-services division, which buys, stores and sells grain commodities around the world, was also challenged throughout the quarter as operating profits fell by more than 30% to $127m. The strength of the US dollar coupled with a large South American harvest, reduced the competitiveness of US grain exports.
Despite the weak quarter result, ADM shares rose almost 4% to $49.48 after the Chicago-based group forecasted a recovery in its US grain export volumes and margins for the second half of the year.
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Archer Daniels Midlands (ADM) has reported an operating profit of $808m for the three months to the end of June, a 9% decline compared with the same period last year. ADM is one of the four ABCD grain traders (ADM, Bunge, Cargill and Dreyfus) that control between 75% and 90% of all the grain traded in the world.
ADM’s earnings (EBIT) for the quarter fell by over $200m to $526m while net profits plummeted by more than 27% to $386m. Revenues for the second quarter fell by a fifth to $17.2bn.
ADM, a major ethanol producer, blamed the weak second quarter results on weak margins as a result of record production from the ethanol industry. As a result of strong demand, corn-based ethanol production in the US soared which pushed down prices, leading to tighter profit margins.
ADM’s agri-services division, which buys, stores and sells grain commodities around the world, was also challenged throughout the quarter as operating profits fell by more than 30% to $127m. The strength of the US dollar coupled with a large South American harvest, reduced the competitiveness of US grain exports.
Despite the weak quarter result, ADM shares rose almost 4% to $49.48 after the Chicago-based group forecasted a recovery in its US grain export volumes and margins for the second half of the year.
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