ADM Q4 earnings decline

ADM Q4 earnings decline

Here's the skinny on the global company's corn and oilseeds processing.

Archer Daniels Midland Co. (NYSE: ADM) reported financial results for the quarter ended Dec. 31, 2013. The company reported adjusted earnings per share1 of $0.95, up 58 percent from the $0.60 in the same period last year. Net earnings for the quarter, which were negatively impacted by charges related to GrainCorp and to ADM’s Brazilian sugar mill, were $374 million, or $0.56 per share, down from $0.77 per share in the same period one year earlier. Excluding specified items, segment operating profit1 was $1.0 billion, up 33 percent.

“The team delivered a strong finish to the year,” said ADM Chairman and CEO Patricia Woertz. “Lower corn costs and improved ethanol margins helped support a significant improvement in our Corn business. Our great Oilseeds performance was driven by our ability to meet robust global demand for meal and by improved biodiesel results in North America and Europe. However, our Ag Services business was impacted by the slow farmer-selling of corn and challenges in international merchandising.

“Looking back on the year, the team made meaningful progress in our efforts to improve cost, cash and capital management. We’re ahead of schedule in our cost savings efforts. We completed a two-year program to unlock cash from our balance sheet. We carefully managed capital spending, and announced a balanced capital plan for 2014.

“Looking ahead, we continue to see strong global demand for our products and large crop supplies. We expect continued good utilization of our North American network until South America’s large harvest reaches global markets.”

Fourth quarter 2013 highlights

  • Adjusted EPS1 of $0.95 per share excludes $0.25 per share in specified GrainCorp-related items, impairment charges of $0.11 per share, and other items totaling $0.03 per share.
  • Oilseeds Processing performed well, with profits increasing $67 million, including strong biodiesel results.
  • Corn Processing continued to improve. Excluding specified items, profit increased $296 million as lower corn costs and good domestic and export demand improved ethanol margins.
  • Agricultural Services profit (excluding GrainCorp-related specified items) declined $54 million. Operating results were diminished by lower U.S. merchandising profits and poor international merchandising results.
  • During the quarter, ADM announced a 26 percent increase in common-stock dividends, and the intent to repurchase 18 million shares by the end of 2014.
  • During the year, ADM carefully managed capital expenditures, investing $957 million.

Oilseeds earnings strong on very good refining, packaging, biodiesel and other performance 
Oilseeds operating profit in the fourth quarter was $478 million, up $67 million from the same period one year earlier.

Crushing and origination operating profit was $252 million, comparable to last year’s strong quarter. ADM’s North America soybean crushing operations had strong margins as they processed record volumes amid solid domestic and export demand. South American earnings improved on strong crushing and origination results and solid contributions from ADM’s crushing facility in Paraguay.

Refining, packaging, biodiesel and other generated a profit of $168 million for the quarter, up $118 million on strong performance across the food-ingredient businesses and improved biodiesel results in North America and Europe.

Cocoa and other results declined as the peanut business delivered lower earnings than the very strong performance in the year-ago quarter. In addition, the cocoa business saw negative mark to market timing effects increase by $15 million from the year-ago period. However, the underlying cocoa business has improved.

Oilseeds results in Asia for the quarter were up $4 million from the same period last year, principally reflecting ADM’s share of the improved results from Wilmar International Limited.

Corn processing results up significantly, supported by improved market conditions 
Corn processing operating profit of $315 million represented an increase of $296 million from the same period one year earlier. These numbers exclude specified items, including an impairment related to the Brazilian sugar mill. Corn hedge timing effects were a positive impact of $25 million, versus a negative impact of $16 million in the year-ago period.

Sweeteners and starches results rose $68 million to $181 million, as net corn costs improved dramatically and overall demand remained seasonally solid.

Bioproducts results increased $228 million to $134 million, with strong domestic and international demand for ethanol driving significantly improved margins.

Agricultural services impacted by slow farmer-selling and poor international merchandising results 
Agricultural Services operating profit in the fourth quarter was $201 million, down $54 million from the same period one year earlier. These numbers exclude specified items, mostly related to GrainCorp.

Merchandising and handling earnings declined $45 million to $84 million on poor international merchandising results and lower U.S. merchandising profits from slower farmer-selling of corn and from fewer wheat merchandising opportunities. International merchandising results were reduced by merchandising and execution issues.

Transportation results were flat at $47 million. Milling and other results remained solid as the milling business continued to perform well.



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