ADM profit falls 15% on higher taxes, corn costs

–Profits Fall 15%, Miss Analysts’ Expectations

–Earnings Slip On Taxes, Corn Costs

–Oilseed Processing, Grain Merchandising Businesses See Profits Increase

(Updates with detail on taxes, corn prices, share price.)

Archer Daniels Midland Co.’s ADM -5.36% fiscal fourth-quarter earnings fell 15% on a sharply higher tax bill and increased corn costs, even as earnings grew at most of its businesses.

The company’s income taxes for the quarter nearly quadrupled to $385 million, driven by a higher rate the grain processor and merchandiser said was atypical. The increase was due to "several unfavorable specific tax items and changes in the geographic mix of earnings," ADM said in a statement.

The company’s effective tax rate was 50%, compared with 19% a year earlier.

Corn costs also curbed profits, as earnings in ADM’s corn-processing unit fell 16% despite a 15% increase in volume. Profits from sweeteners and starches declined as higher average selling prices and volume, led by strong export demand, were offset by increased corn costs.

Corn futures at the Chicago Board of Trade hit an all-time record of nearly hit $8 a bushel in early June, an increase of more than $4.50 a bushel over the prior year.

ADM shares fell 3.9% to $29.30 in premarket trading as adjusted earnings were well below analysts’ expectations. Through Monday’s close, the stock was up 1.3% this year.

The Illinois-based company posted strong profit growth in recent quarters as tight global grain supplies and strong demand for agricultural commodities pushed prices higher.

ADM reported earnings growth in other business units. Its oilseeds processing business, ADM’s biggest segment, reported operating earnings growth of 5.6% amid stronger revenue. Still, volume declined 2%. The agricultural services segment, which includes grain merchandising operations, saw earnings increase 8.4% amid stronger sales. ADM said it had strong results at its North American grain elevators and export operations.

For the quarter ended June 30, ADM reported a profit of $381 million, or 58 cents a share, down from $446 million, or 69 cents a share, a year earlier. The latest quarter included 5 cents a share in inventory-related credits, while the prior year included charges of 2 cents a share. Revenue soared 45% to $22.87 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of 85 cents a share on revenue of $20.43 billion.

Gross margin fell to 4.8% from 5.9%.

http://www.marketwatch.com/story/adm-profit-falls-15-on-higher-taxes-corn-costs-2011-08-02