Archer Daniels Midland Co. Earnings: Margins Shrink on Rising Costs, Net Income Falls

Rising costs hurt S&P 500 (NYSE:SPY) component Archer Daniels Midland Co. (NYSE:ADM) in the fourth quarter as profit dropped from a year earlier. Archer Daniels Midland Company is a processor of oilseeds, cocoa, corn, wheat and other feedstuffs. The company also manufactures vegetable oil and protein meal, corn sweeteners, flour, ethanol, biodiesel and other food and feed ingredients.

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Archer Daniels Midland Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the farm products company fell to $381 million (58 cents per share) vs. $446 million (69 cents per share) a year earlier. This is a decline of 14.6% from the year earlier quarter.

Revenue: Rose 45.6% to $22.87 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ADM fell short of the mean analyst estimate of 84 cents per share. It beat the average revenue estimate of $20.43 billion.

Quoting Management: “Despite a challenging environment in several key markets, ADM delivered solid operating results across all our businesses for the quarter. We earned record operating profit for the fiscal year with our growing global asset base, diversified product portfolio and the acumen of the ADM team,” said Patricia Woertz, ADM chairman and CEO. “Looking ahead, we are confident in our people, our assets and our financial strength to deliver profitable growth and value for our shareholders as we serve the vital needs of a growing world.”

Key Stats:

Gross margin shrank 1.1 percentage points to 4.8%. The contraction appeared to be driven by increased costs, which rose 47.3% from the year earlier quarter while revenue rose 45.6%.

Revenue has risen the past four quarters. Revenue increased 32.6% to $20.08 billion in the third quarter. The figure rose 31.5% in the second quarter from the year earlier and climbed 12.6% in the first quarter from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the third quarter, it topped the mark by one cent, and in the second quarter, it was ahead by 37 cents.

Last quarter’s profit decrease breaks a streak of two consecutive quarters of year-over-year profit increases. Net income rose 37.3% in the third quarter and 29.1% in the second quarter.

Competitors to Watch: Bunge Limited (NYSE:BG), MGP Ingredients, Inc. (NASDAQ:MGPI), Corn Products Intl., Inc. (NYSE:CPO), CHS Inc. (NASDAQ:CHSCP), General Mills, Inc. (NYSE:GIS), SunOpta, Inc. (NASDAQ:STKL), Gruma S.A.B. de C.V. (NYSE:GMK), TreeHouse Foods Inc. (NYSE:THS), Seaboard Corporation (AMEX:SEB), and Monsanto Company (NYSE:MON).

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(Source: Xignite Financials)