Solid Margin In Oilseeds Processing But Weaker Corn Processing Drive ADM To Mixed Q1 Results

During trading hours, Archer-Daniels-Midland Company (ADM: US) posted a first quarter EPS beat, which was led by very solid margins in Oilseeds Processing, somewhat counterbalanced by poorer results in Corn Processing. Archer Daniels Midland Company (ADM) today reported financial results for the quarter ended March 31, 2015.

The company reported adjusted earnings per share1 of $0.77, up from $0.55 in the same period last year. Adjusted segment operating profit1 was $883 million, up 12 percent from $789 million in the year-ago period. Net earnings for the quarter were $493 million, or $0.77 per share, and segment operating profit1 was $855 million.

“In the first quarter, the ADM team demonstrated their ability to leverage the strengths of our diversified business model,” said ADM Chief Executive Officer Juan Luciano. “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 and 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.

“We have continued to advance the strategic plan we shared at our December investor day. In the area of optimizing the core, we announced the acquisition of a Belgian oil bottling business, helping us reach a wider customer base and creating a new output for our European crushing assets. And the WFSI team has been working with customers as they developed and launched new products using SCI, WILD and ADM ingredients. We had more than 200 joint customer engagements, building a pipeline of more than 400 projects, resulting already in more than 30 revenue synergy wins, across a number of regions and business units in Q1 alone. In the area of driving operational efficiencies, we have already identified more than $200 million in run-rate savings opportunities, toward our goal of $550 million in five years. And, in the area of strategic expansion, the corn processing business expanded in high-growth geographies, with the acquisition of the remaining stake of corn wet mills in Bulgaria and Turkey, and an increased stake in a facility in Hungary.”

First Quarter 2015 Highlights1

  • Adjusted EPS of $0.77 is consistent with the reported EPS.
  • Agricultural Services increased $52 million as improved U.S. and global grain merchandising results were partially offset by limited U.S. export competitiveness.
  • Corn Processing decreased $124 million on lower ethanol production volumes and weaker industry margins.
  • Oilseeds Processing increased $153 million with record soybean crushing volumes in Europe and North America and improved grain origination in South America.
  • Wild Flavors and Specialty Ingredients earned $68 million in the first reporting period for this business unit.
  • Trailing four-quarter-average adjusted ROIC was 9.5 percent, up 250 basis points year over year and 290 basis points above annual WACC of 6.6 percent.
  • During the first quarter, the company returned $0.7 billion to shareholders through dividends and the repurchase of 12 million shares.
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Neil Kwan, Post graduate in Finance, is editor and financial analyst and reports Basic Materials, Financial & REIT and Healthcare sectors. Prior joining Equities Mogul, Neil Kwan worked with Cleveland Research. If you have a great story idea for Neil Kwan, you can write at [editor@equitiesmogul.com ].

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