By Jacob Bunge
Archer Daniels Midland Co. plans "aggressive" steps to improve
its grain-trading division after the unit contributed to a 27%
decline in fourth-quarter earnings, executives said Tuesday.
The commodities company is reviewing its international grain
merchandising operations, while supplies of U.S. grain showed signs
of loosening up in recent weeks, which should help its domestic
results, executives said.
"We fumbled, and we will correct that," Chief Operating Officer
Juan Luciano told analysts on a post-earnings conference call. "We
are implanting aggressive actions to improve results."
Mr. Luciano said ADM has deployed officials from the company's
U.S. headquarters to tighten up overseas grain-trading procedures
and has replaced some personnel in the unit.
Decatur, Ill.-based ADM, one of the world's largest traders and
processors of grain, oilseeds and other commodities, reported a
profit of $374 million, or 56 cents a share, down from $510
million, or 77 cents a share, a year earlier.
Earnings from grain trading dropped about one-third to $84
million from $129 million a year earlier, while earnings from ADM's
corn-processing business surged to $279 million, compared with $3
million a year earlier.
Last autumn's record U.S. corn harvest has been a mixed blessing
for ADM. A roughly 40% decline in the price of corn bolstered
margins for its businesses that process crops into products such as
ethanol and sweeteners. But the price drop also prompted farmers to
stash more corn into storage bins rather than sell it at sharply
lower prices.
Farmers in January began selling more grain as they prepared for
the 2014 planting season, Mr. Luciano said.
Meanwhile, ADM will press ahead with a "significant review" of
its overseas grain trading operations, where Mr. Luciano said the
company ran into difficulties buying and selling grain across South
America, Asia and Eastern Europe.
ADM also remains on the lookout for deals despite the Australian
government blocking its proposed 3 billion Australian dollar (U.S.
$2.7 billion) purchase of Sydney-based grain merchant GrainCorp
Ltd., over fears the deal would give too much control of Australian
agriculture to a foreign-based entity. The November ruling dealt a
blow to ADM's plans to sell more grain and commodities into China
and other rapidly expanding Asian economies.
The failed deal with GrainCorp, in which ADM still maintains a
19.9% stake, drove $155 million worth of impairment charges in the
fourth quarter, the company said. Patricia Woertz, ADM's chief
executive, said Tuesday the company has no plans to sell its
position.
ADM is considering other potential "consolidation plays," Mr.
Luciano said, as well as possibly purchasing "specialty products"
that would fit in with ADM's existing agricultural offerings.
Excluding items such as deal-related charges, ADM's adjusted
earnings rose to 95 cents from 60 cents, topping analysts'
expectations.
Revenue decreased 3.1% to $24.14 billion.
Write to Jacob Bunge at jacob.bunge@wsj.com
Tess Stynes contributed to this article.
Order free Annual Report for Advanced Micro Devices, Inc.
Visit http://djnweurope.ar.wilink.com/?ticker=US0079031078 or
call +44 (0)208 391 6028
Order free Annual Report for Archer Daniels Midland Co.
Visit http://djnweurope.ar.wilink.com/?ticker=US0394831020 or
call +44 (0)208 391 6028
Subscribe to WSJ: http://online.wsj.com?mod=djnwires