Quarterly earnings for agricultural giant Archer Daniels Midland (NYSE:ADM) beat analysts' expectations easily, as margins from their corn processing and oil segments improved strongly, and overall demand for some of their products increased in the fiscal fourth quarter company.
Earnings for the quarter came in at $446 million, or 69 cents a share, up from the $58 million, or 9 cents a share last year in the same quarter. Analysts had been looking for 53 cents a share.
Revenue did plunge from $16.5 billion last year to $15.7 billion this year, highlighting the cost measures put in place, which were lower by 8.6 percent from last year, generating the profits for the quarter. Again, it points to the margins being wider in this quarter.
The company was carried in its earnings for the quarter by the oilseeds unit, which generated $359 million of the profits of the company. Still, there was some short-term reference to margins being under pressure this quarter, based on increased global processing capacity which has created an excess of supply. That could lower earnings in the next quarter.
Earnings from the corn processing unit reached $140 million, even with lower margins in the sweeteners and starches segment of the division.
It looks like the company has cut costs to about as low as they can, so going forward performance will be based primarily on demand.
Steven Mills, ADM's chief financial officer said concerning that, "We see growing long-term demand for protein meal but short-term excess processing capacity is resulting in softer crush margins."
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