CHICAGO, ILLINOIS, U.S. — Archer Daniels Midland Company (ADM) reported on Nov. 3 that earnings for the third quarter were $252 million or 41¢ per share, down 66% from $747 million or $1.14 per share in the same quarter last year.
For the first nine months of the year, ADM reported earnings of $1.1 billion or $1.80 down from $1.5 billion or $2.35 per share in the same period a year ago. Adjusted segment operating profit was $684 million, down 27% from $941 million in the year-ago period.
“The ADM team executed well in an environment very similar to the second quarter,” said Juan Luciano, ADM chief executive officer. “Ag Services earnings were limited by lower margins and volumes of North American exports, due to the continued strength of the U.S. dollar and ample global crop supplies, particularly from South America.
Revenue decreased 8.5% during the third quarter to $16.5 billion.
Agricultural services operating profit was $149 million, down $5 million from an adjusted third quarter of 2014 from the year-ago period. A prior period gain in Ag Services was due principally to a $156 million gain on the expansion of the ADM-Marubeni joint venture in the third quarter of 2014 and other individually insignificant disposals.
Merchandising and handling earnings declined $7 million to $57 million. While global demand for agricultural commodities remained solid throughout the quarter, ample global supplies of grain, a weak Brazilian real that motivated Brazilian farmer selling, and a strong U.S. dollar reduced the competitiveness of North American exports — particularly corn and wheat — limiting both volumes and margins, ADM said. Later in the quarter, North American soybean exports became more competitive.
Corn processing operating profit decreased from $341 million to $165 million. The total processed volumes for corn in the third quarter was 7,705,000 tonnes, up from 7,235,000 tonnes in the same period last year.
Sweeteners and starches results declined $33 million to $125 million as North American sweetener volumes and margins remained solid, but co-product margins were weaker, and the slower ramp-up of commercialized volumes at the Tianjin sweetener facility limited absorption of fixed costs.
Bioproducts results declined from $183 million to $40 million due to lower ethanol industry margins. While demand for ethanol domestically and from overseas markets remained solid, industry production levels were also strong, resulting in high industry inventory levels, which kept industry margins considerably lower than last year.
“In Corn, we continue to confront very weak industry ethanol margins, while sweeteners and starches results remain solid amid tight supplies,” Luciano said.
Oilseeds operating profit of $276 million decreased $72 million from the year-ago results. The total processed volumes for oilseeds in the third quarter were 6,038,000 tonnes, up slightly from 6,039,000 tonnes in the same period last year.
Oilseeds results in Asia for the quarter increased $7 million from the year-ago period mainly due to improved results from Wilmar.
“In Oilseeds, good global meal demand again supported soy crushing results, and solid origination volumes contributed to our South American operations, while continued weak oil demand—particularly outside the U.S.—weighed on our softseeds business,” Luciano said.
Crushing and origination operating profit declined $39 million to $175 million. North American soybean crushing operations capitalized on strong meal demand in the U.S. and nearby export markets. Weak demand for vegetable oil reduced margins and volumes of softseeds operations, particularly in Europe. In South America, origination and export margins and volumes for corn and soybeans were boosted by the significant weakening of the Brazilian real and contributed to stronger South American results.
Refining, packaging, biodiesel and other generated a profit of $66 million for the quarter, down $12 million from year-ago results that benefited from $27 million in retroactively applied biodiesel blenders’ credits. This quarter's results benefited from improved margins in refined and packaged oils.
Excluding hedge timing effects and the gain from the sale of the global chocolate business, Cocoa and Other results decreased due to lower cocoa press margins and peanut processing results.
Segment Operating profit of $709 million as reported for the quarter includes a $33 million impairment charge related to ADM's Brazilian sugar-ethanol business and a gain of $32 million on sale of the global chocolate business. In addition, the corporate line includes a $189 million charge associated with U.S. debt repurchases, and a $23 million pension-settlement charge.
“We continue to execute our strategic plan. Among other actions, we've closed on the sale of the global cocoa business, acquired Eatem Foods, and closed the Eaststarch transaction. We're also making strong progress in driving operational efficiencies, which will further enhance our cost position. And we remain committed to our balanced approach to capital allocation for our shareholders,” Luciano said.