DECATUR, ILLINOIS, U.S. — Archer-Daniels-Midland Company (ADM) on Nov. 2 reported that its fiscal first-quarter net earnings fell to $345 million, or 30%, down from $496 million a year earlier. However, revenue rose to $16.8 billion, up from $14.92 billion a year earlier.
Net earnings for the first quarter decreased $151 million due primarily to a $9 million pretax decrease in segment operating profit and a $124 million after-tax negative variance from changing LIFO inventory valuations. The company’s effective income tax rate for the quarter was 26%, compared to 31% for the prior first quarter, mostly due to changes in the geographic mix of earnings.
"The ADM team performed solidly in both corn and oilseeds with both businesses well positioned to meet demand. Agricultural Services results were impacted by crop supply shifts early in the quarter. As we look at markets today, global demand is generally strong," said ADM Chairman and CEO Patricia Woertz. "This presents ADM with the opportunity to grow shareholder value by doing what we do best: use our assets and our acumen to connect crops from regions where they're available to markets where they're needed."
Oilseeds operating profit increased $24 million for the quarter, to a profit of $308 million. Crushing and origination results increased $41 million to $176 million for the quarter. Crushing volumes increased more than 6% over the year-ago quarter, though volumes decreased sequentially. Margins improved overall. North American margins benefited from good raw-material positioning; South America gained from better origination margins and strong fertilizer results in advance of the planting season; and Europe saw strong softseed margins. Refining, packaging, biodiesel and other results increased $6 million to $76 million for the quarter. South American biodiesel continued to improve, driving good margins and volumes in that business. Oilseeds results in Asia were $56 million for the quarter, principally reflecting ADM’s share of the results of its equity investee, Wilmar International Limited.
For the quarter, corn processing results increased $153 million to a profit of $341 million. Corn processing volumes were up, reflecting the capacity of the company’s new dry mills. Sweeteners and starches operating profit decreased $48 million from the prior year to $ 146 million. This decrease reflects lower average selling prices that were only partially offset by lower net corn costs. Sales volumes were up due to strong export shipments and improved domestic demand for industrial starches.
Bioproducts profit in the quarter was up significantly from last year’s loss on improved ethanol and lysine margins, a favorable corn ownership position and increased ethanol sales volumes. In the quarter, bioproducts recorded $32 million in costs related to the start up of new plants.
Agricultural Services results were $132 million, $43 million below the year-ago quarter. Merchandising and Handling profit decreased over last year, due primarily to negative impacts from supply shifts early in the quarter as a result of drought conditions and government actions in the Black Sea region. These negative impacts were only partially offset by a $67 million insurance settlement related to ADM’s Destrehan, Louisiana, U.S., export elevator and by increased volumes driven by the early U.S. harvest. Earnings from transportation operations improved on higher barge-freight rates and volumes which were also driven by the early U.S. harvest.
In the first quarter, ADM’s "Other" business units showed a loss of $16 million, compared to the year-ago profit of $127 million. Other processing results decreased $81 million, with improved results in wheat milling more than offset by lower results in ADM’s cocoa operations and lower results from equity investee, Gruma S.A.B. de C.V. Other processing earnings for the quarter included mark-to-market losses of $59 million — compared to gains of $17 million in last year’s first quarter — related to certain forward purchase and sales commitments accounted for as derivatives.