ADM growth driven by oilseeds, corn

ADM growth driven by oilseeds, corn

Company capitalized on robust ethanol demand, a recovery of U.S. grain export volumes and continuing strong demand for oilseed products.

Archer Daniels Midland Co. (NYSE: ADM) reported financial results for the quarter ended June 30, 2014.

The company reported adjusted earnings per share1 of $0.77, up from $0.46 in the same period last year. Adjusted segment operating profit1 was $819 million, up 32 percent from $621 million in the year-ago period.

Net earnings for the quarter were $533 million, or $0.81 per share, and segment operating profit was $888 million.

“In the second quarter, the ADM team continued to execute very well and delivered strong results. We capitalized on robust ethanol demand, a recovery of U.S. grain export volumes and continuing strong demand for oilseeds products,” said ADM Chairman and CEO Patricia Woertz. “The team also continues to drive improved returns, with this quarter’s ROIC showing a 200-basis-point improvement over last year. Today, the crops in North America and Europe are developing nicely, so we are preparing for what could be very large harvests.”

Second quarter 2014 highlights:

  • Adjusted EPS of $0.77 excludes approximately $73 million in pretax LIFO income, or $0.07 per share, and $31 million in pretax costs related to restructuring, or about $0.03 per share.
  • Oilseeds Processing increased $18 million, as continued good North American crushing results were partially offset by weaker origination results in South America and lower results from Wilmar.
  • Corn Processing increased $69 million on strong ethanol demand and steady sweetener volumes.
  • Agricultural Services increased $122 million, driven by strong U.S. exports and significantly improved results from international merchandising.
  • Trailing four-quarter-average adjusted ROIC increased 200 basis points year over year.
  • The net debt position of the company declined to $3.6 billion, compared to $5.5 billion in the same period last year, which also resulted in a lower net interest expense.
  • ADM repurchased 7.2 million shares during the quarter, bringing year-to-date buybacks to 11.5 million shares for about $500 million.

Oilseeds earnings steady with strong N.A. crush offset by weaker S.A. origination and Wilmar

Oilseeds operating profit of $328 million represented an increase of $18 million from the same period one year earlier. These numbers exclude a negligible charge for cocoa hedge timing effects, versus a gain of $11 million, or $0.01 per share, in the year-ago period.

Crushing and origination operating profit declined $22 million to $163 million. North and South American soybean crushing operations and North American canola crushing operations all saw good volumes and margins. Those were offset by lower results from South American origination amid slower farmer selling.

Refining, packaging, biodiesel and other generated a profit of $119 million for the quarter, up $26 million with good volumes and margins for refined and packaged oils in South America and record results for lecithin and protein specialties.

Cocoa and other earned $20 million in the quarter, up $37 million from the year-ago period, reflecting the improved margin environment in the cocoa business.

Oilseeds results in Asia for the quarter were down $23 million from the same period last year, principally reflecting lower results from Wilmar International Limited.

Corn processing results improved significantly on strong performances across the segment
Corn processing operating profit of $277 million represented an increase of $69 million from the same period one year earlier. These numbers exclude positive timing effects of $70 million, or $0.07 per share, versus $15 million, or $0.01 per share, in the year-ago period.

Sweeteners and starches results increased $25 million to $136 million on steady volumes, with lower average selling prices offset by lower net corn costs.

Bioproducts results increased $44 million to $141 million driven by strong demand and good margins in ethanol.

Agricultural services results improve on strong U.S. grain exports and international merchandising
Agricultural Services operating profit was $203 million, up $122 million from the year-ago period.

Merchandising and handling earnings increased $101 million to $115 million, amid strong U.S. export volumes, partial recovery of a loss reserve, and continued improvement in international merchandising results.

Transportation results increased $24 million to $27 million with southbound barge freight utilization driven by strong U.S. exports, and with good northbound utilization.

Milling and other results were essentially flat as lower milling results were offset by strong performance by the edible bean business.

Other items of note
This quarter’s effective tax rate was 28 percent, versus 29 percent in the same period last year.

As additional information to help clarify underlying business performance, the tables on page 9 include both adjusted EPS as well as adjusted EPS excluding significant timing effects.

 

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