Archer Daniels Midland Company (NYSE: ADM).
We produce the food ingredients, animal feeds and feed ingredients, biofuels and other products that manufacturers around the world use to provide wholesome food and a better life to millions of people around the globe.
How do we turn crops such as corn, oilseeds, wheat, and cocoa into ingredients that make foods taste great? Find out by downloading our corporate brochure, "Understanding ADM and Food," here.
How does our leading position in the agricultural processing chain enable us to produce clean, renewable fuels today, and to work toward developing next-generation petroleum alternatives? Read all about it in a brochure called "Understanding ADM and Biofuels," available by clicking here.
For additional information on our various business segments and the specific products they produce, please visit our pages on Oilseeds Processing, Corn Processing, Other Food and Feed Ingredients and Agricultural Services.
ADM Reports First Quarter Earnings of $0.41 per Share, $0.46 per Share on an Adjusted Basis 26/4/2019
Net earnings of $233 million Extreme weather conditions negatively impact segment OP by approximately $60 million Expectation for stronger second half, driven by improved business environment and contributions from accelerating business initiatives
CHICAGO -- (BUSINESS WIRE)-- Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended March 31, 2019.
"The first quarter proved more challenging than initially expected," said Chairman and CEO Juan Luciano. "Impacts from severe weather in North America were on the high side of our initial estimates, and the ethanol industry environment limited margins and opportunities.
"Despite a challenging start to the year, we continue to make excellent progress on our key imperatives for 2019: improving performance in certain businesses, accelerating our Readiness efforts, and delivering results from our growth investments," Luciano continued. "We are very encouraged with our new Neovia business and the creation of a global Animal Nutrition platform. Readiness continues to expand our efforts to enhance our competitiveness. And additional actions we are announcing today will help us advance our goals to deliver best-in-class customer service along with long-term growth and shareholder value.
"With three quarters of the year still ahead of us, the continued advancement of our strategy, combined with an anticipated resolution of the U.S.-China trade situation and an expected acceleration of soybean meal demand driven by African Swine Fever, make us optimistic for the second half. Taking all of these factors into account, we remain committed to continuing to pull the levers under our control to deliver our objective of full-year earnings comparable to or higher than 2018."
As part of that commitment, the company is announcing a series of measures to continue to underpin long-term-value creation:
* First, to meet growing customer demand, ADM plans to repurpose its corn wet mill in Marshall, Minnesota, to produce higher volumes of food and industrial-grade starches as well as liquid feedstocks for food and industrial uses, phasing out production of high-fructose corn syrup at that facility as soon as committed deliveries are complete.
* Second, the company is creating an ethanol subsidiary, which will include ADM's dry mills in Columbus, Nebraska; Cedar Rapids, Iowa; and Peoria, Illinois. The ethanol subsidiary will report as an independent segment. The new structure will allow the company to advance strategic alternatives, which may include, but are not limited to, a potential spin-off of the business to existing ADM shareholders.
* Finally, ADM has begun a series of actions to enhance agility, accelerate growth, and strengthen customer service. These actions include organizational changes to centralize and standardize business activities and processes, and enhance productivity and effectiveness; accelerating the capture of planned synergies after a period of acquisitions; and offering early retirement for some colleagues in the U.S. and Canada.
* As a result of Readiness-based improvements in capital prioritization, project evaluation and project execution processes, and in keeping with the company's commitment to returns, ADM also plans to reduce 2019 capital spending by 10 percent, to the range of $0.8 to $0.9 billion.
* EPS as reported of $0.41 includes a $0.02 per share gain on the sale of certain assets and a step-up gain on an equity investment, a $0.02 per share charge related to asset impairment and restructuring charges, a $0.02 per share charge related to acquisition expenses, and a $0.03 per share tax expense related to the U.S. tax reform and certain discrete items. Adjusted EPS, which excludes these items, was $0.46.1
1 Non-GAAP financial measures; see pages 5, 10 and 11 for explanations and reconciliations, including after-tax amounts.
Results of Operations
Origination results were higher than the prior-year period.
* Merchandising and Handling results were higher than the first quarter of 2018, which had been impacted negatively by significant mark-to-market timing effects. Good execution that drove solid margins in North American grain; a strong performance in structured trade finance; and the reversal of some timing impacts from the fourth quarter all helped to offset a softer performance in global trade, which was impacted by normalized South American soybean and soybean meal margins compared with the first quarter of last year. Results in the quarter were also negatively affected by high water conditions, which limited grain movement and sales in North America.
* Transportation was up year-over-year as higher freight rates and improved northbound movements offset lower overall barge volumes caused by unfavorable river conditions.
Oilseeds results were comparable to the year-ago period, which benefited significantly from the Biodiesel Tax Credit.
* Crushing and Origination results were up significantly versus the first quarter of 2018, which included significant negative timing effects. Higher executed crush margins around the globe and favorable timing effects from prior-year hedges drove improved results, more than offsetting the impacts of slow farmer selling and lower Chinese demand on South American origination.
* Refining, Packaging, Biodiesel and Other results were lower than the year-ago quarter, which included the significant impact of the 2017 Biodiesel Tax Credit. Increased contributions from food oils in North America and Europe helped contribute.
* Asia was lower on Wilmar results.
Carbohydrate Solutions results were significantly lower than the year-ago quarter.
* Starches and Sweeteners was down versus the first quarter of 2018, driven by pressured European sweetener industry volumes and margins, impacts of severe weather in North America, higher manufacturing costs at the Decatur complex, and weaker margins in flour milling.
* Bioproducts results were much lower than the prior-year period. Ethanol margins were down significantly versus last year's first quarter in a continued weak industry environment, and production volumes were affected by severe weather.
Nutrition results overall were down year-over-year, with WFSI results higher and Animal Nutrition results lower.
* WFSI results were higher year-over-year, with 21 percent profit growth spread across all three businesses, and WILD Flavors in particular turning in another very strong performance. Year-over-year sales increased 11 percent on a constant currency basis, and an improved product mix helped drive positive results.
* Animal Nutrition results were lower than the first quarter of 2018. Last year's quarter benefited from temporary industry effects on vitamin additives. Neovia closed on Jan. 31, resulting in additional up-front costs related to inventory revaluation. Lysine production and yields continued to improve from the third quarter 2018 production disruptions, with the expectation of achieving normalized yields by the end of the second quarter.
Other results were in line with the year-ago period. Captive insurance was lower on unfavorable underwriting results, and ADM Investor Services results improved year-over-year.
Other Items of Note
As additional information to help clarify underlying business performance, the table on page 10 includes reported earnings and EPS as well as adjusted earnings and EPS.
Segment operating profit of $611 million for the quarter includes gains of $12 million ($0.02 per share) related to the sale of certain assets and a step-up gain on an equity investment, as well as a $9 million charge ($0.02 per share) related to asset impairment.
In Corporate results, unallocated corporate costs for the quarter increased principally due to centralization of certain activities from the business units, resulting in a transfer-in of costs; investments in IT, R&D and innovation; and Readiness-related project costs. Other charges for the quarter in Corporate improved due to better results from the company's investment in Compagnie Industrielle et Financiere des produits Amylaces SA (CIP).
Corporate results also include restructuring charges of $2 million and acquisition-related expenses of $14 million ($0.02 per share).
The effective tax rate for the quarter was approximately 26 percent, including transition tax expense from U.S. tax reform and other discrete items. The adjusted effective tax rate, excluding these items, was about 19.3 percent.
Conference Call Information
ADM will host a webcast on April 26, 2019, at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call. To listen to the webcast or to download the slide presentation, go to www.adm.com/webcast. A replay of the webcast will also be available for an extended period of time at www.adm.com/webcast.
Some of the above statements constitute forward-looking statements. These statements are based on many assumptions and factors that are subject to risk and uncertainties. ADM has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC reports. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements.
For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve the vital needs of a growing world. Today, we're one of the world's largest agricultural processors and food ingredient providers, with approximately 40,000 employees serving customers in nearly 200 countries. With a global value chain that includes approximately 450 crop procurement locations, more than 330 food and feed ingredient manufacturing facilities, 62 innovation centers and the world's premier crop transportation network, we connect the harvest to the home, making products for food, animal feed, industrial and energy uses. Learn more at www.adm.com.