ADM puts up good Q1 resultsADM puts up good Q1 results
May 22, 2015
Ag Services, Oilseeds segment profits boost ADM financial results.
ARCHER Daniels Midland Co. (ADM) recently released financial results for the quarter ended March 31, reporting adjusted earnings of 77 cents per share, an increase from 55 cents in the same period last year.
Adjusted segment operating profit was $883 million, a 12% increase from $789 million in the year-ago period (Table). Net earnings for the quarter were $493 million, or 77 cents per share, and segment operating profit was $855 million.
"In the first quarter, the ADM team demonstrated their ability to leverage the strengths of our diversified business model," ADM chief executive officer Juan Luciano said. "The Oilseeds team capitalized on favorable market conditions and delivered outstanding results, with strong performances in each region. In Ag Services, our recently created global trade desk (GTD) platform drove higher merchandised volumes. Our new WILD Flavors & Specialty Ingredients business got off to a great start toward achieving the cost and revenue synergies we identified last year. Together, these performances helped deliver a good quarter overall, even as lower industry ethanol margins limited earnings in corn, and the strong dollar limited U.S. grain exports."
Agricultural Services operating profit was $194 million, up $52 million from the year-ago period. Merchandising and handling earnings improved $38 million to $107 million. ADM's new GTD merchandising platform saw increased volumes and margins. In North America, volumes and margins improved despite a very active fourth quarter, the start of the South American harvest and the impact of a strong U.S. dollar.
Transportation results were essentially flat, with increased demand for northbound U.S. barge freight mostly offsetting decreased southbound demand due to reduced exports from the Gulf of Mexico.
Milling and other results improved $15 million to $55 million due primarily to strong margins for flour, grain and feed.
Corn Processing operating profit decreased from $251 million to $127 million year over year. Sweeteners and starches results declined $10 million to $85 million, with increased North American volumes offset by lower contributions from co-products, reduced equity earnings from joint ventures and start-up costs related to the Tianjin sweetener facility in China.
Bioproducts results declined from $156 million to $42 million due to lower ethanol production volumes amid weaker industry margins. Supply/demand imbalances challenged industry ethanol margins most of the quarter, although conditions and margins have been improving since late March.
Oilseeds operating profit of $483 million increased $153 million from strong year-ago results. Crushing and origination operating profit increased $173 million to $334 million. ADM said soybean crushing results for the quarter were the strongest ever, with record volumes in Europe and North America and strong margins globally, driven by robust U.S. and global meal demand.
Improved farmer selling helped support a significant improvement in South American origination results. Results for refining, packaging, biodiesel and other generated a profit of $52 million for the quarter, down $33 million. Improved biodiesel results in South America — from Brazil enacting increased blending standards — were offset by lower margins in North America and weaker demand in Europe.
Oilseeds results in Asia for the quarter improved from the year-ago period, primarily driven by stronger Wilmar results.
During the fourth quarter of 2014, ADM closed on the acquisitions of WILD Flavors GmbH and Specialty Commodities Inc. Starting with the first quarter of 2015, ADM created a new business segment — Wild Flavors & Specialty Ingredients — which includes the results of these two businesses as well as ADM's legacy specialty ingredients businesses. The new segment's first-quarter operating profit was $68 million.
ADM segment operating profit, million $
Merchandising and handling
Milling and other
Total Agricultural Services
Sweeteners and starches (excl. timing effects)
Bioproducts (excl. timing effects)
Corn hedge timing effects
Total Corn Processing
Crushing and origination
Refining, packaging, biodiesel and other (excl. spec. item)
Cocoa and other (excl. timing effects)
Cocoa hedge timing effects
Total Oilseeds Processing
Wild Flavors & Specialty Ingredients
Total Wild Flavors & Specialty Ingredients
Segment operating profit
Adjusted segment operating profit
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