Photo courtesy of ADM.
|Juan Luciano, chairman and chief executive officer of ADM.|
“Our year-over-year results improved as a company and in all four of our business segments in the first quarter, and we continue to be on course for a stronger 2017,” Juan Luciano, chairman and chief executive officer of ADM, said during a May 2 conference call with analysts. “Ag Services was up for the quarter, with higher results in U.S. grain and transportation operations. The Corn business delivered a good quarter, with improved performances across their portfolio. Oilseeds earnings were up, including solid results in global softseeds and from our equity investment in Wilmar. WFSI results were higher, led by Wild Flavors.”
Luciano said ADM continues to execute the long-term strategic plan it introduced in 2012.
“We have strengthened our core, improving our cost positions and implementing measures to improve results where necessary,” he said. “Our operational excellence initiatives have delivered significant savings and efficiencies. And we continue to grow strategically by expanding into new geographies and increasing our capabilities in food, beverage and feed. Those actions contributed to the improved results we saw in the first quarter despite muted margin environments in some businesses. The continued momentum in the execution of our plan gives us confidence that we will deliver sustainable value creation.”
Operating profit in the Oilseeds Processing unit was $313 million in the first quarter, up 20% from $260 million in the same period a year ago. Crushing and origination profit was flat at $120 million.
“Oilseeds delivered one of its strongest recent quarters with overall results up year-over-year,” Luciano said. “Our crushing and origination results were largely flat. As expected, despite good global demand for protein meal overall, global soybean crush margins remained pressured as alternative protein meal continued to impact the market. We expect feed wheat supplies to largely clear the market by the end of the second quarter and demand for soybean meal to increase in Europe. Our global softseed processing footprint and flex capacity have continued to be positive factors. Oil and cottonseed results were both significantly higher than the previous year as we capitalize on margin opportunities both in North America and Europe.”
Agricultural Services operating profit increased 8% to $81 million from $75 million, as transportation jumped to $24 million from $4 million. Milling and other results fell to $45 million from $48 million, and merchandising and handling fell to $19 million from $24 million.
“Our North America barge and stevedoring operations saw increased loads, and our stevedoring operations reported record volumes,” Luciano said.
Solid performance from Wild Flavors offset a slight decline in specialty ingredients, contributing to a 7% increase in operating profit at Wild Flavors and Specialty Ingredients to $75 million from $70 million.
Operating profit within the Corn Processing unit increased 35% to $177 million from $131 million. Sweeteners and starches results improved $20 million to $161 million behind a strong performance on improved domestic demand and higher volumes and margins from the company’s European business. Bioproducts turned in a profit of $10 million, which compared with a loss of $12 million a year ago, due primarily to strong exports and improved margins.
“We are continuing to see higher volumes and margins from our European business,” Luciano said. “The results out of our new sweetener complex in Tianjin, China, also improved over the year-ago quarter. Another important driver of success for corn was buyer products. Export demand for U.S. ethanol is high. Ethanol margins were better than the year-ago quarter due to exports as well as solid domestic demand.”