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ADM profits boosted by robust global demand

TAGS: Business
Adjusted earnings per share rose 79% year over year.

Archer Daniels Midland Co. (ADM) reported higher financial results for the quarter ended June 30, 2018, as a result of strong execution and robust global demand. The company reported net earnings of $566 million. Adjusted earnings per share rose 79% during the quarter to $1.02.

“Our team executed exceptionally well to deliver outstanding results in the second quarter,” ADM chairman and chief executive officer Juan Luciano said. “We continue to accelerate the execution of our strategic plan — optimizing our core, driving efficiencies and expanding strategically — generating more than $150 million in run-rate savings, announcing three acquisitions in Nutrition and closing on two new joint ventures overseas."

He continued, “Our actions, combined with robust global demand, position us to navigate today’s dynamic business environment and deliver strong results in the second half of 2018 and put us on a trajectory for continued future growth in earnings, returns and shareholder value.”

Results of operations

The financial report also showed that Origination and Merchandising & Handling results were up significantly over the second quarter of 2017.

ADM said North American Grain was also a major contributor, as supply disruptions in Argentina and Brazil led to strong global demand for U.S. commodities, resulting in significantly higher volumes and margins for corn, wheat and soybean exports. Grain also benefited from solid risk management in basis positions and from timing impacts from the first quarter, the company added.

The diversified earnings base of the Global Trade segment contributed positively to results, as losses related to potential sorghum duty deposits were offset by strong performances in other areas, particularly ocean freight. Destination marketing volumes continued to grow in the quarter, ADM said.

Transportation was significantly higher year over year, driven by increased volumes as U.S. waterways returned to more normal conditions. Transportation also benefited from ARTCO’s growing businesses in backhaul freight and stevedoring.

Oilseeds results were up significantly over the prior-year period. Crushing and origination achieved a second-quarter record in crush volumes, delivering significantly higher year-over-year results amid continued strong soybean meal demand and robust crush margins. In South America, high origination volumes and improved margins -- largely driven by more aggressive farmer selling and robust demand from China -- contributed to strong results, the company noted. Timing effects for the quarter were a net positive.

Refining, Packaging, Biodiesel & Other was up versus the second quarter of 2017. Solid specialty and refined oils results were partially offset by weaker results in golden peanut and tree nuts.

ADM reported that Asia results were lower due to Wilmar's performance.

The company reported that Carbohydrate Solutions results were modestly lower than the year-ago quarter.

Starches & Sweeteners performance was down versus the prior-year period. North American liquid sweeteners had a solid quarter and were in line with the year-ago period. Globally, starch volumes and dry sweetener margins were strong in the quarter, leading to good performances. The end of the European Union's sugar regime and a delay in implementation of quotas in Turkey negatively affected results in European liquid sweeteners. Flour milling was affected by negative timing effects and lower volumes in Caribbean operations, ADM reported.

Bioproducts results were down primarily because of lower ethanol production volumes and higher costs due to plant downtime, the company said, adding that execution margins for ethanol were lower versus the prior year.

Nutrition delivered a 7% increase in revenue on a constant currency basis for the quarter, and earnings were significantly higher than the year-ago period.

WFSI results were up substantially versus the second quarter of 2017, with Specialty Ingredients, WILD Flavors and Health & Wellness all delivering improved sales and earnings. Specialty Ingredients benefited from improved volumes and margins in proteins and from increased sales in fibers. In WILD Flavors, new business and an improved portfolio mix boosted sales and margins.

The company reported higher year-over-year Animal Nutrition results, driven by stronger performances in lysine as well as in pet premix and treats.

Other results increased on stronger ADM Investor Services earnings due to higher short-term interest rates, the company said.

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