Shares of food processor Archer Daniels Midland Co. (NYSE: ADM) are slightly lower this morning after the company posted a rise of 7% in its second-quarter profit, but missed analysts' earnings estimates. The company said its profit increased during the second quarter as the company benefited from higher volumes and selling prices. Strong earnings from oilseed processing and higher feed grains demand helped ADM offset lower ethanol business margins.
Archer's profit climbed to $473 million, or 73 cents per share. These numbers are up from $441 million, or 67 cents per share, in the same period a year ago. Analysts, on average, expected the food processor show earnings of 74 cents per share.
The world's largest producer of corn-based ethanol also announced a respectable jump of 50% in revenue to $16.5 billion, up from $10.98 billion a year earlier. Sales during the period were helped by higher commodity prices, such as feed grains, wheat and corn. Analysts had forecast $12.75 billion in revenue, according to Thomson Financial.
Higher global demand for protein and oil pulled Archer Daniels oilseed processing operating profit 14% up to $219 million. On the other hand, lower ethanol selling prices and higher corn costs made the company's corn processing operating profit plunge 18% to $275 million. However, higher crop prices resulted in the company posting an overall increase in profit.
According to a statement from Patricia Woertz, the company's Chief Executive Officer, Archer Daniels shows satisfaction with its quarterly "record earnings" which reflects "the value created by and the strengths of our broadly diversified asset base and product portfolio."
The company's shares had a strong year, climbing more than 28% as crop prices rose and planted acres increased on government incentives for biofuels. Despite losing some ground last month with the overall market, ADM has rebounded pretty fast and expect to see Archer Daniels showing further gains.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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