US Citi cuts ADM earnings on slow economy

08 October 2008 19:45  [Source: ICIS news]

HOUSTON (ICIS news)--Citi Investment downgraded on Wednesday its earnings estimates for major US biodiesel, glycerine and grain processor giant Archer Daniels Midland (ADM) amid forecasts of a faltering global economy and slowing demand for grain products.

Citi reduced its fiscal year 2009 earnings/share (EPS) estimates for Illinois-based ADM to $2.20/share (€1.61/share), down 20 cents/share, or 8%. It cut its 2010 earnings forecast by 25 cents/share, or 11%, to $1.90/share.  

ADM operates a 285,000 tonne/year biodiesel plant in Velva, North Dakota, and is also one of the largest US suppliers of refined glycerine.

 “We walked away from ADM's recent analyst day with a confirmation of our beliefs that business fundamentals are weakening across several of ADM's key businesses,” Citi said in its analysis.

The forecast cut comes amid a general economic downturn that has hit agricultural chemical companies especially hard.

“Upon some sign of stabilisation in GDP growth globally, we would perhaps be more bullish on ADM, for now we are content to remain focused on our long-held bullish thesis on the large-cap branded foods.” the analyst added.

($1 = €0.73)

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By: Ben Lefebvre
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