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ADM Net Tops Estimates on Higher U.S. Grain Exports

Archer Daniels Midland Co., the world’s largest grain processor, reported second-quarter profit and sales that beat analysts’ estimates as the company exported record grain volumes from the U.S. The shares climbed in New York trading.

Net income rose 29 percent to $732 million, or $1.14 a share, in the three months through Dec. 31, from $567 million, or 88 cents, a year earlier, the Decatur, Illinois-based company said today in a statement. Profit excluding a $71 million gain related to an acquisition was $1.07 a share, topping the 78-cent average estimate of 12 analysts surveyed by Bloomberg. Operating profit increased 40 percent to a record of $1.36 billion.

“They beat our operating profit estimate significantly, with corn processing and agricultural services both beating our estimates by a wide margin,” Ian Horowitz, a New York-based analyst for Rafferty Capital Markets LLC who rates the shares “buy,” said in an e-mail. “It looks like the company was net long corn and experienced the strong throughput through their agricultural services assets as we expected.”

Profit in ADM’s agricultural-services unit, its biggest by sales, nearly tripled amid disruptions in global grain supplies after drought hurt crops in Russia and Ukraine last year and floods reduced the quality of Australia’s harvest. The U.S. is becoming the world’s dominant supplier with its “ample” stocks, Christina McGlone, an analyst for Deutsche Bank AG in Greenwich, Connecticut, said in a Jan. 24 report.

Sales Gain

Total sales in the quarter increased 31 percent to $20.9 billion from $15.9 billion a year earlier. Eight analysts in the Bloomberg survey estimated sales on average of $17.5 billion

ADM climbed $2.03, or 6.2 percent, to $34.70 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 15 percent in the past 12 months.

Profit from ADM’s agricultural-services segment, which buys, sells and transports grains, rose to $426 million from $150 million a year earlier after the unit “shipped record volumes through its U.S. origination and export network,” the company said. Asia is leading global demand for protein meal, ADM said.

Corn-processing operating profit rose 38 percent to $399 million from a year earlier as ethanol production and sweetener demand from Mexico increased, the company said. ADM’s corn-processing volumes gained 24 percent as its two new mills ramped up.

Operating profit from the company’s units was tempered by inventory valuations from higher agricultural commodity prices, ADM said. Operating profit for each segment is based on net sales minus identifiable operating expenses, the company said.

Oilseed-processing profit fell 7.7 percent to $325 million amid lower European results as commodity prices increased.

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