DECATUR, ILLINOIS, U.S. — Archer Daniels Midland Company (ADM) reported on May 1 earnings for the first quarter of $269 million, or 41¢ per share, down from $399 million and 60¢ per share reported in the same quarter a year earlier.
Adjusted earnings per share were 48¢, down from 78¢ in the same period last year. Segment operating profit was $630 million.
“As expected, this was a challenging quarter, with agricultural services negatively impacted by the ongoing effects of last summer’s U.S. drought,” said ADM Chairman and Chief Executive Officer Patricia Woertz. “In oilseeds, our earnings were reduced by challenges in Brazil and depressed margins in cocoa. Our ethanol business improved as declining inventories supported overall industry margins, and we began to see positive results from the actions we’ve been taking to improve the profitability of that business.
“We continue to manage through tight U.S. stocks of oilseeds and grains until the North American harvest. Demand for our products remains solid, and we will continue to leverage our global origination and processing network to serve the needs of our customers worldwide.”
Oilseeds Processing profit decreased $229 million due to significantly lower results from cocoa caused by industry margin pressures and weaker South American origination results. Year-ago results included net favorable mark-to-market timing effects of about $60 million, while this quarter included minimal timing effects.
Crushing and origination operating profit was $156 million, down $108 million from the year-ago quarter. In North America, softseed crushing results were down from last year’s strong results as tight supplies affected seed basis and capacity utilization. North American soybean crushing results were strong in the quarter, but margins and production declined through the quarter amid weaker export meal demand and lower bean availability. In South America, higher trucking costs and reluctant farmer selling negatively impacted results. European crushing and origination results continued to recover, aided by reduced imports of North and South American meal.
Refining, packaging, biodiesel and other generated a profit of $108 million for the quarter, up $29 million, as U.S. biodiesel demand saw a modest recovery, offset by poor margin conditions in Europe. Results included about $20 million in biodiesel blender’s credits, retroactive from 2012 blending.
Oilseeds results in Asia for the quarter were up $31 million from the same period last year, principally reflecting ADM’s share of the improved results from Wilmar International Limited.
Corn Processing profit increased $20 million to $153 million due to improved ethanol results. Sweeteners and starches results were negatively impacted by a $44 million pretax charge from corn hedge timing effects (4¢ per share).
Sweeteners and starches operating profit decreased $19 million to $76 million, and was improved when adjusted for corn hedge-program timing effects, as solid demand translated to tight sweetener industry capacity.
Bioproducts results increased $39 million to $77 million. Ethanol margins improved through the quarter as reduced industry production rates, lower levels of imports and steady domestic demand resulted in reduced inventories and improved margins. Results also benefited from actions taken by ADM to improve the performance of its ethanol business.
Agricultural Services operating profit was $151 million, down $110 million from the same period one year earlier.
Merchandising and handling earnings declined $62 million to $86 million, due to lower volumes of U.S. origination and exports and lower execution margins in international merchandising.
Transportation results decreased $21 million to $6 million as lower U.S. exports reduced barge freight utilization.
Milling and other results remained steady, excluding last year’s $21 million equity income from Gruma. ADM disposed of its ownership in Gruma in December 2012. The milling business continued to perform well.
ADM is in discussions with the U.S. Department of Justice and the U.S. Securities and Exchange Commission regarding a previously disclosed FCPA matter dating back to 2008 and earlier, and expects a resolution sometime this year. Based upon recent discussions, ADM believes it is appropriate to establish a provision of $25 million (4¢ per share) to cover the potential assessments that may be imposed by these government agencies.