ADM adjusted earnings down for first-quarter

by World Grain Staff
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DECATUR, ILLINOIS, U.S. — Archer Daniels Midland Co. (ADM) reported on Nov. 1 adjusted earnings per share for the first-quarter of 58¢, 13% lower than the prior year quarter.

Net earnings for the quarter were $460 million or 68¢ per share, up 33% and 26% respectively from the same period last year.

“The first quarter presented a difficult and challenging market environment,” said ADM Chairman and Chief Executive Officer Patricia Woertz. “Margin conditions in our global oilseeds segment were generally weak, and net corn costs were high. We offset some of these pressures with good management of our commodity positions and by capturing opportunities through our broad and diverse portfolio.

“During the quarter, we acquired oilseeds facilities in Poland and India, and expanded our agricultural services operations to support exports. And we returned capital to shareholders through dividends and share buybacks of $347 million. Looking ahead, we see the margin environment modestly improving, and we are optimistic about the long term.”

Adjusted EPS of 58¢ excludes a LIFO gain of 11¢ and debt exchange costs of 1¢.

Oilseeds Processing profit declined $87 million amid a challenging global oilseed crushing environment; however, ADM’s diverse oilseed portfolio helped offset some of this weakness.

Corn Processing profit decreased $162 million as net corn costs more than doubled from the prior year; net corn costs for the quarter were negatively impacted by economic hedging benefits recognized in prior quarters.

Agricultural Services profit increased $112 million on strong global merchandising results, including a strong recovery of exports from the Black Sea region.

Other businesses improved by $71 million on the strength of improved cocoa press margins and smaller losses in the captive insurance subsidiary.

ADM returned $347 million to shareholders in the quarter, including buying back 8.6 million shares for $240 million.

The U.S. harvest is nearing completion, with a smaller crop than last year. Global supply is adequate for soybeans and wheat, but tighter in corn, ADM said. Global demand for crops and agricultural products continues to be solid. Global protein meal demand continues to grow, driven by emerging economies. U.S. corn sweetener capacity remains tight, driven by strong export demand. With positive blending economics, U.S. ethanol consumption remains at maximum blendable levels.

Ethanol spot margins should continue to be good in the near term. The company is contracting with corn sweetener customers and is optimistic for 2012 calendar year pricing and margins. There has been modest margin improvement in soybean and rapeseed crush, and ADM will continue to leverage the diversity and strength of its oilseed business portfolio, the company said. More of the world’s demand for agricultural commodities will be met with non-U.S. supply, and ADM will leverage its global asset base to help meet this demand.
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