ADM says GrainCorp deal delayed; adjusted profit misses view

Reuters

* Q3 revenue tops estimates

* Large harvests expected to boost results

* "Fundamentals should improve" - analyst

By Tom Polansek

CHICAGO, Oct 29 (Reuters) - Archer Daniels Midland Co said on Tuesday its planned A$3.0 billion ($2.8 billion)acquisition of Australian grain handler GrainCorp Ltd will likely be delayed until early next year.

ADM, one of the world's top grain traders, also reportedthat adjusted third-quarter earnings fell, and missed estimates,as U.S. crop supplies remained tight following a historic U.S.drought last year.

ADM shares were up 2 percent at 40.61 as large harvests thisyear were expected to replenish inventories and boost results.

"ADM's fundamentals should improve, reflecting large globalcrop supplies and ongoing strong demand," said Ken Zaslow, ananalyst for BMO Capital Markets.

The GrainCorp acquisition is part of ADM's strategy toexpand globally and lead to increased exports to China and theMiddle East. It is the latest move in the rapid consolidation ofthe global grains sector amid intense competition to feedfast-developing countries like China.

ADM had planned to complete the deal by the end of the year.It awaited approval from regulators in Australia and China,where GrainCorp has an edible oils facility.

Australian Treasurer Joe Hockey said this month the deadlinefor a regulatory decision was extended to Dec. 17 due to thesize and "complex nature" of the transaction.

"We expect closing to be some time in the first quarter of2014," ADM Chief Operating Officer Juan Luciano told analysts ona conference call.

ADM is among the four large players known as the "ABCD"companies that dominate the flow of agricultural goods aroundthe world. The others are Bunge Ltd, Cargill Inc and Louis Dreyfus Corp.

Last year's U.S. drought hurt grain companies by slashingthe volume of grain available for them to buy, sell, transportand process.

ADM's net earnings for the third quarter rose to $476million, or 72 cents per share, from $182 million, or 28 cents,a year ago, as an accounting credit lifted results.

Adjusted earnings were 46 cents per share, down from 53cents in the same period a year ago. Analysts expected 47 cents,according to Thomson Reuters I/B/E/S.

Profits in ADM's core agricultural services business droppedby $152 million to $102 million, after adjusting for specialcharges a year ago. Earnings from crop merchandising andhandling declined by $104 million to $4 million as low U.S. cropsupplies reduced export volumes and international merchandisingwas weak.

Revenue totaled $21.39 billion, down from $21.81 billion ayear ago, but above expectations of $20.62 billion.

MASSIVE HARVESTS

The United States is set to harvest a record-large corn cropthis year and the fourth largest soybean crop on record,according to the U.S. Department of Agriculture.

"Obviously a big crop will present to ADM and ag services anexcellent opportunity to use all our assets," COO Luciano saidon the conference call.

The USDA is set to update its 2013 crop production estimatesin a monthly report on Nov. 8. Traders eagerly awaited the dataafter the department canceled October's crop report due to thepartial U.S. government shutdown.

The U.S. corn harvest was 59 complete as of Sunday and thesoybean harvest was 77 percent complete.

ADM also said it had no update for investors about apotential sale of its cocoa business. Cargill is in the finalstages of a deal to buy the business, sources familiar with thediscussions have said.

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