ST. LOUIS (AP) — Archer Daniels Midland Co. said Tuesday that its first-quarter profit tumbled 53 percent as the global recession dragged down demand for crops and ethanol, but demand is improving in some key markets.
Patricia Woertz, the company's chairman and CEO, said sales improved from the first half of 2009, and the company was seeing some stronger demand as the U.S. economy pulls out of recession.
"We did see overall operating conditions in the quarter improve," Woertz told analysts during a conference call. "Decline in demand for food, feed and fuel seems to be bottoming" out.
The Decatur, Ill., company said it earned $496 million, or 77 cents per share, compared with $1.04 billion, or $1.62 per share, last year.
The results widely beat Wall Street expectations, with analysts surveyed by Thomson Reuters forecasting a profit of 57 cents per share.
Revenue fell 29 percent, to $14.92 billion, from $21.16 billion, dragged down by declines in commodity costs. But sales volumes remained steady. Analyst expected revenue of $17.92 billion.
Crop and ingredient prices have fallen significantly from this time last year when a global food shortage had pushed commodity prices to record highs.
Prices strengthened this fall as wet weather delayed the harvest of corn and soybeans. Many analysts worry the harvest will be thinner because excess moisture will damage the crops. Woertz said the company is positioning itself to profit from the soggy harvest by installing industrial dryers at eight of its grain elevators.
That could increase the amount of corn sold to it rather than competing processors, she said, and boost its revenue this year.
Woertz didn't specify which sectors of the company were seeing stronger demand this quarter, but it appears the ethanol segment is gaining steam, said Tom Graves, an analyst with Standard & Poor's Equity Research in New York.
"In general, my sense is that ADM has an improving outlook growing forward" as global demand for food and fuel increase, he said.
ADM is one of the nation's biggest ethanol producers, but it doesn't break out its ethanol results separately. The division that includes ethanol production lost $6 million during the first quarter, down from a profit of $53 million the year before.
Shares of ADM jumped $1.27, or 4.2 percent, to $31.79 in afternoon trading.
