Strong 2Q profits for ADM

A leading agricultural processor of soybeans, corn, wheat and cocoa, the company reported a net income of $220.8 million for the quarter ended 31 December, up from $131.2 million on the previous year.

Demonstrating savings to be gained from dominating connecting elements of the supply chain - commodities to ingredients - the corn processing arm provided improved results. Both ethanol and sweetener volumes and selling prices improved over prior year levels and the division brought in earnings of $137 million, rising from $71 million a year earlier.

Signs that the current pressing wheat climate - global stocks at a 30 year low - were evident for ADM's wheat processing division that, although showing gains, were not quite at the ampleur of the other divisions, coming in at $23 million, up from $18 million for the same quarter in 2003.

The same scenario for the oilseed processing operation with droughts in the US this summer cutting soybean harvests and hence supplies. But the company reported a slight rise in profit from $102 million in 2003, to $120 million for the second quarter this year.

Considerable gains were made at the processor's agricultural services unit - including grain origination and transportation - with profits more than tripling to $106million, from $34 million in 2003.

As with other global players looking to cash in on emerging markets, the company - with over 270 processing plants worldwide - has expanded its grain operations in South America and Asia. Growth in China in particular is likely to be a two-pronged attack - to maximise on a growing market, and to protect current contracts.

In a bid to end the Mexican government's 20 per cent 'discriminatory tax' on soft drinks containing high fructose corn syrup (HFSC), ADM started an arbitration proceeding against the country last year. The company - a leading supplier of HFCS in Mexico - is looking for $100 million in compensation.