ADM’s sales fall despite demand outside China
Grain company expresses optimism as it reports a profit decline for the fourth quarter
Archer Daniels Midland Co. reported higher demand for key agricultural commodities outside of China at the end of last year, but the company still said overall sales dropped in the fourth quarter.
ADM said Tuesday said that North American corn and soybean exports to customers in markets outside of China rose in the fourth quarter, and demand for wheat also boosted results.
The company said it achieved the gains despite “the extremely small volume of U.S. soybean exports to China.”
China avoided purchasing soybeans from U.S. producers for several months last year until late December. Last week, the country committed to buying 5 million tons, U.S. officials said. The country purchased about 60% of the domestic export crop as of 2017.
The Chicago-based company said revenue in its origination business, which focuses on buying, storing and selling agricultural commodities, fell about 8% compared with the year earlier. ADM also said results were lower compared with the fourth quarter of 2017 because of significant insurance settlements and other income it recorded then.
The company also reported lower margins and volumes in its ethanol business in key markets overseas, as well as higher costs in its liquid-sweeteners business in North America. Those challenges pushed sales in its carbohydrate solutions business down 10% to $2.49 bil- lion in the fourth quarter. Overall, ADM said sales dropped 0.8% to $15.95 billion in the fourth quarter, falling short of the $16.81 billion analysts predicted according to FactSet.
Profit fell to $315 million, or 55 cents a share, in the quarter, compared with $788 million, or $1.39 a share, a year earlier. Adjusted earnings of 88 cents a share fell short of the 92 cents a share analysts expected.
Investors have focused of late on any effects on ADM from the Trump administration’s approach to trade policy and tariffs China has placed on U.S. agricultural products.
Shares of ADM, up 8.6% for the year through Monday, dropped 1.8% in premarket trading.