ADM earnings surge on large harvest

by World Grain Staff
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CHICAGO, ILLINOIS, U.S. — Archer Daniels Midland Co. (ADM) reported on Feb. 3 that earnings for the quarter ended Dec. 31, 2014, were up 87.4% thanks to a record-large U.S. harvest that boosted grain volumes and supported strong exports.
 
ADM reported net earnings of $701 million, or $1.08 per share, up from $374 million, or 56¢ a share, a year earlier. For the calendar year, adjusted earnings per share of $3.20 were up 37% versus the prior year.
 
Excluding special items such as charges related to ADM's purchase of flavorings company WILD Flavors, earnings were $1.00 per share, up from 95¢ a year earlier. Adjusted segment operating profit was $1.13 billion, an increase of 8% from $1.04 billion a year earlier.
 
“The Agricultural Services team executed well to capitalize on strong conditions, while international merchandising continued to show year-over-year recovery,” said ADM Chief Executive Officer Juan Luciano. “In North America and Europe, Oilseeds showed strong year-over-year growth, offset by weaker results in South America. Looking ahead in North America and Europe, solid crush margins and export opportunities have carried into the first quarter. Market conditions in South America Oilseeds should improve with the large harvest, and we are working toward higher returns throughout 2015 in this key geography.
 
“While U.S. ethanol demand was seasonally strong, boosted by the domestic response to lower gasoline prices, high industry production has built excess inventories. Margins in this industry should remain challenged until supplies are better aligned with demand. We will continue our work to optimize cost and product mix in the Corn business to maximize profitability.”
 
Oilseeds Processing operating profit of $395 million was down $107 million from an exceptional comparator, with record profits from North American soybean crushing and strong results from soybean crushing in Europe more than offset by weakness in South American results.
 
Crushing and origination operating profit decreased $46 million to $206 million. Higher capacity utilization and improved margins helped drive record soybean crushing results in North America and very strong European crushing results. Results in South America were significantly lower, due to reduced crush margins, continued slow farmer selling, and weaker fertilizer results.
 
Refining, packaging, biodiesel and other generated a profit of $99 million for the quarter, down $69 million. Overcapacity pressured margins in European biodiesel during the quarter, while year-ago North American biodiesel results benefited from a surge in demand ahead of the expiration of the U.S. blender's credit.
 
Oilseeds results in Asia for the quarter were generally in line with the prior period, with the recovery of Wilmar results from earlier in the year.
 
Corn Processing operating profit decreased by $31 million to $284 million with rising net corn costs through the quarter partially offset by strong ethanol results.
 
Sweeteners and starches results declined $114 million from an exceptionally strong period last year, to $67 million on weaker margins due to expected lower average selling prices and net corn costs that rose through the quarter.
 
Bioproducts results increased from $134 million to $217 million, driven by favorable ethanol results. In addition, animal nutrition results improved on better margins and solid demand.
 
Agricultural Services increased $234 million amid strong margins, record volumes and good execution in the U.S., and improved international merchandising.
 
Merchandising and handling earnings improved $179 million from a weak year-ago quarter, to $263 million, supported by strong margins, effective handling of record volumes from the large U.S. harvest, ability to maximize storage and strong execution. In addition, international merchandising continued to recover, with good results from the Black Sea region.
 
Transportation results increased $45 million to $92 million on strong northbound and southbound barge freight demand and favorable operating conditions.
 
Milling and other results improved $10 million to $80 million, mostly driven by improved blending and basis gains in the milling business.
 
ADM’s board of directors has declared a quarterly cash dividend of 28¢ per share on the company’s common stock, an increase of approximately 17% from the prior quarterly rate, resulting in estimated annual dividend payments of $0.7 billion in 2015.
 
The dividend is payable on March 10, 2015, to shareholders of record at the close of business on Feb. 17, 2015. As of Dec. 31, 2014, there were 636,704,061 shares of ADM common stock outstanding.
 
The company expects 2015 capital expenditures of between $1.1 and $1.3 billion.
 

 

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