CHICAGO - Archer Daniels Midland Co reported a lower-than-expected quarterly profit for a fifth consecutive quarter as poor ethanol margins and lower earnings from its grain exporting and trading operations stung the company in the second quarter.
The earnings miss follows a rough first quarter for ADM, when a large trading loss stemming from volatile crop prices sliced profits by 53 percent.
After a volatile second quarter which saw grain and oilseed prices surge in April and May before slumping in June, Chicago-based ADM forecast improved market conditions in the second half of 2016.
U.S. farmers are expected to harvest record or near-record corn and soybean crops this fall.
"The first half of the year was very challenging. However, with improved fundamentals, we anticipate a more favorable second half of the year," Chief Executive Juan Luciano said in a statement.
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Still, the company warned that losses at Singapore-based vegetable oils processor Wilmar International Ltd, in which ADM holds a 22 percent stake, would result in $50 million in equity losses in the third quarter.
ADM makes money by buying, selling, transporting, storing and processing grains and oilseeds around the world.
The company, along with rivals Bunge Ltd, Cargill Inc and Louis Dreyfus Corp, makes up the so-called ABCD firms that have traditionally dominated the flow of agricultural commodities.
ADM's agricultural services segment, its largest in terms of revenues, turned in an adjusted profit of $57 million, down from $127 million in the same quarter a year earlier.
Corn processing earnings fell to $163 million, from $188 million a year ago, as strong results from sweeteners and starches were offset by poor ethanol profits.
ADM, among the largest ethanol makers in the world, said it reduced production of the biofuel due to thin margins and high inventory levels.
Oilseeds processing results fell to $235 million, from $301 million a year earlier, amid volatile oilseed processing margins.
ADM's WFSI segment, which includes its flavorings and food ingredients businesses, reported a $94 million profit, down from $104 million a year earlier.
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Net earnings attributable to ADM fell to $284 million, or 48 cents per share, for the quarter ended June 30 from $386 million, or 62 cents per share, a year earlier.
Excluding items, profit was 41 cents per share, below the average analyst estimate of 45 cents, according to Thomson Reuters I/B/E/S.
Revenue slid to $15.63 billion, below the average estimate of $16.97 billion.
