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ADM posts stronger 2018 Q3 earnings

Company expects continued momentum for growth in 2019.

Krissa Welshans 1

November 6, 2018

4 Min Read
ADM posts stronger 2018 Q3 earnings

Archer Daniels Midland Co. (ADM) released financials results this week, showing a much stronger third quarter for 2018 than the same period last year. Third-quarter net earnings of $536 million were up significantly from just $192 million in the third quarter of 2017. Earnings per share were 94 cents, compared to 34 cents in 2017.

ADM chairman and chief executive officer Juan Luciano said the company delivered another strong quarter by capitalizing on robust global demand through good execution and great utilization of the company’s global footprint.

“For the last several years, through good conditions and bad, we’ve remained focused on serving our customers and delivering our strategic plan — optimizing our core, driving efficiencies and expanding strategically,” Luciano said. “Now, as we look forward to 2019, we are continuing to enhance our earnings power, both through our growth investments and our Readiness initiative, which is beginning to drive fundamental changes in the way we run our company.”

Luciano said a solid end to 2018 as well as continued momentum for growth in earnings and returns in 2019 and the years to follow are expected due the hard work of the ADM team.

Results of operations

According to ADM, results in the Origination segment were up substantially year over year. Merchandising and handling results were also significantly higher versus the weak third quarter of 2017.

“In North America, the business managed risk well in a volatile price environment and capitalized on its asset base to deliver higher volumes and margins, including strong export sales to customers in markets outside of China,” ADM noted. “In global trade, good utilization of the company’s global network of origination assets and continued expansion of destination marketing volumes and margins drove solid results.”

Transportation results more than doubled year over year, driven by higher volumes and margins in ARTCO, the company said.

Oilseeds results rose from $113 million in the third quarter of 2017 to $349 million in the third quarter of 2018, with soybean crush the major driver behind that growth. North America, the Europe/Middle East/Africa (EMEA) region and South America all delivered substantially higher results year over year.  

Further, ADM said crushing and origination set a new record for crush volumes, leveraging the company’s strong global asset base and growing destination marketing capabilities to capitalize on higher global crush margins.

Softseeds results showed a significant improvement from the third quarter of 2017 as well, with particularly good results in EMEA.

Refining, packaging, biodiesel and other results were down versus the third quarter of 2017, although biodiesel was up substantially year over year. Edible oils also continued to perform well, the company said. Peanut shelling margins were significantly lower, primarily caused by large peanut inventories and difficult market conditions.

According to ADM, the results in Asia were higher on a strong performance for Wilmar.

However, carbohydrate solutions results were slightly lower than the year-ago quarter.

ADM reported that Starches & Sweeteners delivered solid results, slightly below the strong prior-year period. EMEA sweeteners continued to benefit from recent acquisitions, delivering good results despite a sugar oversupply in the region. Flour milling was higher, benefiting from strong wheat procurement results and timing effects. North American liquid sweeteners were negatively affected by higher input and manufacturing costs.

Bioproducts results were down, the company reported, as positive results from effective ethanol risk management as well as beverage and industrial alcohols were offset by an extremely weak ethanol industry margin environment.

The company noted that following a fire during the first weekend of November, the downtime issues in the Decatur, Ill., plant are continuing to affect North American results.

In Animal Nutrition, issues that developed during the quarter constrained lysine production volumes and increased manufacturing costs, contributing to a loss of $13 million, compared to a $9 million profit in the 2017 third quarter. Lower premix margins also had an impact on results, the company said.

Nutrition results were in line with the prior-year period, with very strong WFSI results offset by a weaker performance in Animal Nutrition.

WFSI results were significantly higher on the year, delivering 10% year-over-year sales growth on a constant currency basis and more than 30% growth in operating profit. WILD results for EMEA and North America were substantially higher due to the portfolio mix and improved volumes.

In Specialty Ingredients, emulsifiers and proteins continued to perform well. The Health & Wellness business continued to grow with the addition of Protexin.

Other results increased due to improved captive performance underwriting performance, ADM said.

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