Market News & Headlines >> Logistics Problems Hurt ADM Grain Merchandising Business in First Quarter
Logistics problems, exacerbated by the brutal winter, ate into Archer Daniels Midland profits in the first quarter, the company reported Tuesday.
The company reported earnings of $267 million, or 40¢/share, down from $269 million a year ago. On an adjusted basis, the company reported earnings of 55¢/share, below the Wall Street consensus of 74¢. ADM stock prices were down more than 3% following the report.
The company’s biggest struggles were in its grain merchandising and handling business, which saw earnings decline to $69 million, down $17 million from a year ago. The company said its profits here were hurt by the inverted corn, soybean and wheat markets, and that the weather, which slowed rail and river transportation all winter, exacerbated the problem.
Chief Operating Officer Juan Luciano said the company will need another large corn crop this year for the pipeline to be refilled enough so that the grain merchandising segment can reach its “full potential.”
ADM did better in its ethanol business, reporting earnings of $196 million in the corn processing unit, up from $153 million a year ago. The company said strong exports helped it overcome transportation challenges that had slowed overall U.S. ethanol production this winter. Margins have been historically high in recent months. “We worked every logistical angle and worked our plants hard,” Luciano said of the ethanol business.