Friday, February 02, 2007

ADM's Financial Outlook is in the GREEN

ADM did exceptionally well during its last fiscal quarter with earnings up 20%. The prospective outlook of corn-processing in the making of ethanol as a viable alternative fuel will continue to make ADM a top competitor in the industry.


From the AP:
Archer Daniels Midland Co., the nation's largest food processor, said Thursday its second-quarter profit rose 20 percent, driven in large part by a jump in corn-processing profit. ADM shares jumped more than 10 percent in early trading.
For the quarter ended Dec. 31, earned $441.3 million, or 67 cents per share, compared with $367.7 million, or 56 cents per share, a year earlier.
Revenue rose to $10.98 billion from $9.3 billion in the year-ago period.
The results topped Wall Street's expectations. Analysts polled by Thomson Financial had expected a profit of 60 cents per share on $9.52 billion in revenue.
ADM shares rose $3.25, or 10.1 percent, to $35.25 in morning trading on the New York Stock Exchange.
'We are particularly pleased with the strong performance from all segments,' ADM Chief Executive Officer and President Patricia Woertz said.
The Decatur-based company is also the country's largest producer of the fuel additive ethanol, made from corn.
ADM's corn-processing business, which includes its ethanol production, had a particularly strong quarter. Operating profit increased 42 percent from a year earlier to $335 million.
Strong prices for both ethanol and corn-based sweetener helped those results, according to ADM, but they were somewhat offset by high corn prices. Demand for ethanol has driven corn prices up in recent months.
Speaking to financial analysts, Woertz declined to detail ADM's strategy to manage volatility in the corn and fuels markets.
'We know what we're doing in times of turbulence,' she said.
High corn prices, while driving up ADM's ethanol production costs, are also necessary to convince farmers to plant enough corn to meet increases in ethanol demand, she said.
Ethanol prices generally rise and fall with petroleum prices. As the price of oil and gasoline rise, demand for alternatives such as ethanol generally increases and pushes those up, too. The price of crude oil has increased in recent weeks after falling late last year.
'The rebound in petroleum prices is a very positive event for ADM's ethanol business and should act to assure investors that profit margins will remain solid,' Citigroup analyst David Driscoll wrote Thursday in a note to investors.
Ethanol and other alternative fuels also have received a considerable push the past two years in Washington, D.C., most recently last week when President Bush called for fivefold increase in the production of such fuels over the next 10 years.
That mandate has to be weighed against the industry's ability to meet it and the demand created by the market, said Brian Peterson, ADM's senior vice president for corporate affairs.
'We're very, very interested in making sure that we have rational growth in this industry,' he said.
ADM now has several ethanol plants across the Midwest, but also has a biodiesel plant operating in Mexico and two more expected to open next year in the United States, Woertz added.

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