ADM reports Q1 net earnings of US$267M, down 0.7% from year-ago period as revenues fall 4.5% to US$20.7B

Nevin Barich

DECATUR, Illinois , April 29, 2014 (press release) – Net earnings of $267 million or $0.40 per share

Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended Mar. 31, 2014. The company reported adjusted earnings per share1 of $0.55, up from $0.46 in the same period last year. Net earnings for the quarter were $267 million, or $0.40 per share, comparable to the $0.41 per share in the same period one year earlier. Segment operating profit1 was $691 million, up 10 percent from the year-ago period. Adjusted segment operating profit1 was $780 million, up 17 percent from the year-ago period.

“Our businesses delivered mixed results in the first quarter,” said ADM Chairman and CEO Patricia Woertz. “Our Ag Services business again generated weak results due to a low margin environment as well as logistics and weather challenges in the U.S. Continued strong performance in Corn was supported by the robust ethanol market. And the sustained, solid results in Oilseeds were driven by good margins and volumes in North and South American soybean crushing.

“We continued to make good progress during the quarter in our ongoing portfolio management and other key initiatives to improve the earnings power and returns of the company.”

First Quarter 2014 Highlights1

Adjusted EPS of $0.55 excludes approximately $159 million in pretax LIFO charges, or $0.15 per share.
Oilseeds Processing operating profit increased $50 million, as North American soybean crushing had strong utilization amid good meal demand, and South American soybean crushing and origination benefited from large harvests, good demand, and an improved logistics environment.
Corn Processing operating profit increased $64 million on strong results from ethanol.
Agricultural Services operating profit increased $2 million, as market conditions and higher costs limited merchandising and handling margins.
Oilseeds Earnings Strong on Soybean Crushing

Oilseeds operating profit of $358 million represented an increase of $50 million from the same period one year earlier. These numbers exclude a charge for cocoa hedge timing effects of $24 million, or ($0.03) per share, versus a gain of $5 million in the year-ago period.

Crushing and origination operating profit was essentially flat, at $161 million. North American soybean crushing operations benefited from good crush capacity utilization in a favorable margin environment driven by strong domestic and export meal demand. That was offset by lower results in North American softseeds. In South America, soybean crushing operations saw improved utilization, and the logistics network saw increased volumes as it began moving the large harvest to world markets in an improved environment. European results were essentially flat.

Refining, packaging, biodiesel and other generated a profit of $113 million for the quarter, up $5 million as improved European biodiesel results offset a decline in North America due to the absence of $20 million in biodiesel tax credits recorded in the year-ago period.

Cocoa and other earned $30 million in the quarter, up $57 million from the year-ago period, as the margin environment in the cocoa business continued to improve.

Oilseeds results in Asia for the quarter were down $17 million from the same period last year, principally reflecting ADM’s share of lower results from Wilmar International Limited.

Corn Processing Results Improved on Strong Ethanol Margin Environment

Corn processing operating profit of $261 million represented an increase of $64 million from the same period one year earlier. These numbers exclude negative timing effects of $65 million, or ($0.06) per share, versus a loss of $44 million, or ($0.04) per share, in the year-ago period.

Sweeteners and starches results declined $13 million to $107 million, with overall sales volumes for the quarter down slightly.

Bioproducts results increased $77 million to $154 million. Strong export demand and lower industry production volumes combined to drive a steadily improving margin environment throughout the quarter.

Agricultural Services Weak Amid Lack of Margin Opportunities

Agricultural Services operating profit was $153 million, similar to the year-ago period. Results for the quarter include the recovery of about $20 million of a previously established loss provision.

Merchandising and handling earnings declined $17 million to $69 million, as margins were limited both by inverted corn, soybean and wheat markets and by increased costs that were exacerbated by weather.

Transportation results recovered $27 million to $33 million. Pent-up barge freight demand caused by the harsh U.S. winter pushed freight rates up significantly as river traffic returned in March.

Milling and other results declined $8 million to $51 million as a lack of the seasonal carry in the wheat futures market reduced grain and feed merchandising opportunities.

Other Items of Note

This quarter’s effective tax rate was 27 percent, versus 28 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 timing effects.

Conference Call Information

ADM will host a conference call and audio webcast at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call.

To listen to the call via the Internet or to download the slide presentation, go to www.adm.com/webcast. To listen by telephone, dial (888) 522-5398 in the U.S. or (706) 902-2121 if calling from outside the U.S. The access code is 22738761.

Replay of the call will be available from April 30, 2014, to May 6, 2014. To listen to the replay by telephone, dial (855) 859-2056 in the U.S. or (404) 537-3406 if calling from outside the U.S. The access code is 22738761. The replay will also be available online for an extended period of time at www.adm.com/webcast.

About ADM

For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve vital needs. Today, 31,000 ADM employees around the globe convert oilseeds, corn, wheat and cocoa into products for food, animal feed, industrial and energy uses. With more than 270 processing plants, 470 crop procurement facilities, and the world’s premier crop transportation network, ADM helps connect the harvest to the home in more than 140 countries. For more information about ADM and its products, visit www.adm.com.

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

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