CHICAGO, ILLINOIS, U.S. — Net earnings at Archer Daniels Midland Co. (ADM) in the second quarter ended June 30 were $284 million, equal to 48¢ per share on the common stock, down 26.4% from $386 million, or 62¢ per share, in the same period of last year.
Revenue for the second quarter was $15.629 billion, down 9 % from $17.186 billion in the same period a year ago.
|Juan Luciano, ADM chairman and chief executive officer.|
“After a challenging start to the year, general market conditions began to turn at the end of the second quarter, providing us with improved opportunities for the second half of the year,” Juan Luciano, ADM chairman and chief executive officer, said when results were announced on Aug. 2. “Weak grain handling margins and merchandising results continued for Ag Services. Results for Corn included strong performance in sweeteners and starches offset by lower ethanol results. Our Oilseeds operations leveraged their flex capacity to crush record volumes of soybeans in the second quarter as global protein demand continues to grow.”
Operating profit in the Agricultural Services segment was $97 million, down from $152 million in the year-ago quarter. Merchandising and handling earnings sustained a loss of $14 million, which compared with a gain of $41 million a year ago. The decline was primarily due to compressed margins across the U.S. grain handling network. Excluding the valuation gain booked last year related to the acquisition of the company’s Romanian port, international merchandising results were up due to stronger origination results in Argentina and the addition of destination marketing in Egypt through the Medsofts joint venture, ADM said.
Transportation results fell to $15 million from $19 million, due to weak barge demand and lower freight rates.
In Milling and other, ADM Milling had a strong second quarter on solid volumes and margins, but operating profit for the second quarter was $56 million, down from $67 million in the same period of last year.
During the second quarter ADM said it processed 13.555 million tonnes, including 8.468 million tonnes of oilseeds and 5.087 million tonnes of corn. This total compared with total processed volumes of 14.147 million in the same period a year ago.
Corn Processing operating profit increased to $219 million from $204 million.
Sweeteners and starches results increased to $182 million from $145 million as the business continued to perform well with higher volumes and pricing, and improved margins from optimizing product grind in the company’s corn wet mills. The integration of the recent Eaststarch and Morocco acquisitions has gone better than planned, contributing to the company’s global sweeteners and starches portfolio and results, ADM said.
Bioproducts sustained a loss of $19 million, which compared with a gain of $43 million in the same quarter of last year. With ethanol margins continuing to be weak coming into the quarter due to high industry inventory levels, the company decreased production.
Lysine results continued to be pressured by large global production, particularly early in the quarter. However, results improved late in the quarter as global inventories declined and strong demand continued, ADM said.
Oilseeds operating profit for the second quarter was $234 million, down sharply from $344 million in the year-ago quarter.
Crushing and origination operating profit was $135 million, which compared with $198 million the year before. The decline was driven primarily by continued weak canola margins as well as lower soy crush margins, which were historically high last year. The company achieved record soy crush volumes in North America and Europe through increased utilization of new flex capacity. Throughout the quarter, the company effectively managed through unprecedented crush margin volatility, ADM said.
Refining, packaging, biodiesel and other results fell 18% mainly due to biodiesel timing effects, despite strong results in Specialty Fats and Oils and Golden Peanut, ADM said.
Oilseeds results in Asia for the quarter improved slightly from the year-ago period, partially due to Wilmar International’s first-quarter equity earnings. In the second quarter ADM increased its ownership stake in Wilmar to 22% from 20%. Wilmar issued a profit warning in July, announcing that it expects to report net losses of approximately $230 million for its second quarter. Because ADM records its share of Wilmar’s results on a one quarter lag basis, ADM expects to report about $50 million of equity losses in its third-quarter results.
“During the quarter, we continued to advance our strategic plan, acquiring full ownership of Amazon Flavors, a leading Brazilian manufacturer of natural extracts, emulsions and compounds,” Luciano said. “We added soybean crushing capability to our facility in Straubing, Germany, allowing us to utilize flex capacity while also meeting growing customer demand for non-GMO soybean meal and oil in Western Europe.”
He continued, “The first half of the year was very challenging. However, with improved fundamentals, we anticipate a more favorable second half of the year.”