Net earnings attributable to ADM in the third quarter ended Sept. 30 totaled $192 million, equal to 34c per share on the common stock, down nearly 44% from $341 million, or 58c per share, in the same period a year ago.
Total revenue for the quarter decreased slightly, to $14,827 million from $15,832 million.
|Juan Luciano, president and chief executive officer of ADM.
“Through the quarter, we took several actions to be even more competitive in the future, including restructuring our global workforce, reconfiguring the Peoria ethanol complex, working to complete several operational start-ups, driving additional asset monetizations and
further reducing costs through our Project Readiness initiative. Some of these actions had only begun to take hold in the third quarter.”
ADM’s Ag Services includes merchandising and handling, milling and other and transportation. The segments result as a whole were down compared with a strong prior-year period. Its operating profit for the third quarter of 2017 was $87 million, which compared with $195 million a year ago.
In Merchandising and Handling, results decreased in both North America Grain and Global Trade, largely due to the lack of competitiveness of U.S. corn and soybeans in global markets.
“Transportation results decreased from the prior year period, due to a slower start of harvest in North America, which led to lower barge freight volumes and margins,” Luciano said. “Milling and other earnings were down due to lower volumes, though the business was still a strong contributor and maintained steady profit margins.”
ADM processed 5.621 million tonnes of corn during the third quarter of 2017, down from 5.794 million tonnes processed in the third quarter of 2016.
Oilseeds Processing results for the third quarter totaled $119 million, down from the third quarter of last year. Crushing and Origination results were affected by compressed global crush margins and weak South America origination margins.
“Crushing and origination results were down,” Luciano said. “Globally, crush margins remained compressed with ample meal supplies. In North America, results were impacted by weak canola margins, partially due to higher seed costs. Our European processing business was down amid competition from significantly increased flow of mill imports from Argentina. In South America, originations remained tight due to continued low commodity prices that reduced the pace of farmer commercialization, forcing higher basis costs.”
Both corn and oilseed segments produced a total of 13.886 million tonnes down as well from the same period of last year.
Refining, Packaging, Biodiesel and Other experienced lower earnings versus the third quarter of 2016, due primarily to weaker biodiesel results caused by lower margins and negative mark-to-market impacts.
Asia was up over the prior-year period on Wilmar results that were lower than anticipated, but still higher than last year’s. In August, ADM increased its stake in Wilmar by spending S$129 million on 40 million shares, according to a filing on the Singapore Exchange. ADM’s stake in Wilmar increased to 24.9% from 24.3%. The company has been steadily increasing shares in Wilmar over the last few years.
Wild Flavors & Specialty Ingredients (WFSI) results were down $12 million versus the prior-year quarter. Wild Flavors delivered double-digit operating profit growth with strong sales in Asia and EMEA. Specialty Ingredients was down for the quarter, due in part to higher costs caused by operational start-ups in certain businesses.
“As we move through the fourth quarter, we are starting to transition from the period of costs and investments in acquisitions, new innovation centers and new facilities to a period of lower capital spending and increasing benefits from these investments,” Luciano said.