Archer Daniels Midland Co.'s (ADM) second-quarter earnings fell
21%, partly due to an increased provision for a legal matter, while
the U.S. grain trader and processor's sales weakened.
ADM's agricultural services segment, which includes grain
storage and exporting, has been challenged by tight U.S. supplies
stemming from last year's drought, the worst in decades in the U.S.
The company has previously warned the pressure on agricultural
services may persist until autumn in the U.S.
Meanwhile, GrainCorp Ltd. (GNC.AU), Australia's largest grain
company, accepted ADM's sweetened A$3.4 billion takeover offer in
April after being pursued for six months. The deal will give the
Illinois-based company control of seven of the eight ports on
Australia's east coast, the gateway to Asia's booming food market,
and 90% of the grain shipped from it.
ADM also confirmed in June it was in talks to sell its cocoa
business, which accounted for 4.2% of its total revenue last
year.
ADM reported a profit of $223 million, or 34 cents a share, down
from $284 million, or 43 cents, a year earlier. Excluding items
such as foreign-currency hedging losses and additional provisions
related to a Foreign Corrupt Practices Act matter, adjusted
earnings rose to 46 cents from 38 cents. Sales declined 0.6% to
$22.54 billion.
Analysts polled by Thomson Reuters had most recently forecast
per-share earnings of 44 cents on revenue of $22.87 billion.
Gross margin was flat at 3.6%.
ADM, the U.S. Department of Justice and the U.S. Securities and
Exchange Commission have been in discussions about a previously
disclosed FCPA matter dating back to 2008 and earlier. Based upon
recent progress, ADM said it increased its provision to $54 million
from the $25 million established in the first quarter.
Shares closed Monday at $37.86 and were inactive premarket. The
stock is up 38% so far this year.
Write to Melodie Warner at melodie.warner@dowjones.com
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