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ADM posts “solid” Q4 results amid merger speculation

Archer Daniels Midland Company (ADM) has reported its financial results for the quarter ended December 31, 2017 with the company CEO stating the American global food processing and commodities trading corporation has a solid end to 2017.

However, total revenue dropped by 2.6 percent to US$16.07 billion as the sluggish demand for US grains continues. And the company reported a net profit of US$788 million, or US$1.39 per share, which is an increase from US$424 million, or 73 cents per share, a year earlier.

Company chairman and CEO Juan Luciano said that a growing global presence, food and beverage innovation, as well as focus on health and wellness, have all contributed to the company’s strong growth.

“We pulled the levers under our control - including cost and capital initiatives and interventions throughout the year - to deliver value for shareholders,” said ADM Chairman and CEO Juan Luciano. “I am also proud that our more than 31,000 colleagues delivered the best quarterly employee safety record in ADM’s history.”

“For 2017 as a whole, we grew earnings per share, improved returns on invested capital and generated positive EVA. Looking ahead, we expect improving results through 2018 as our strategy advances.”

“Our increasing international presence, and expanding capabilities in areas such as destination marketing, food and beverage innovation, and health and wellness, all help to position ADM for continued growth and value creation.”

Fourth quarter 2017 highlights
Agriculture services results were up over the prior-year period. Merchandising and Handling earnings increased year-over-year. The lack of competitiveness of US grain exports was offset by solid performance in global trade, strong destination marketing gains, and insurance and other income, says the company statement.

Transportation results decreased from the prior-year period, due to lower barge loadings and freight values, while milling and other earnings were down year-over-year due to lower volumes and margins.

Corn Processing results increased over the prior-year fourth quarter. Sweeteners and Starches had another strong quarter, with solid earnings growth over the prior year in both North America and EMEA. Lower year-over-year results in Bioproducts due to lower ethanol margins were partially mitigated by favorable risk management.

Oilseeds processing results were down compared to the fourth quarter of last year, while Crushing and Origination results were lower due to weak crush margins, despite strong crush volumes and continued growth in demand. Origination results in South America were impacted by weak margins.

Refining, Packaging, Biodiesel and Other experienced lower earnings versus the fourth quarter of 2016, due primarily to weaker biodiesel margins, partially offset by strong refining and packaging results. Asia was up slightly over the prior-year period on Wilmar results.

WFSI results were solid, up versus the prior-year quarter. WILD Flavors delivered double-digit operating profit growth with strong sales across all regions. Specialty Ingredients results were up versus a challenging year-ago period.

Other results decreased due to unfavorable underwriting performance from the company’s captive insurance operations compared to favorable underwriting income in the prior year period.

Segment operating profit of US$733 million for the quarter includes charges of US$62 million (US$0.07 per share) related to a settlement charge and asset impairment and restructuring charges.

In Corporate results, unallocated corporate costs for the quarter decreased due to lower employee costs and the absence of certain costs incurred last year. Minority Interest and Other charges for the quarter include several individually insignificant restructuring charges totaling US$7 million (US$0.01 per share) compared to last year’s U.S. OPEB curtailment gain of US$38 million (US$0.04 per share) and restructuring charges of US$3 million.

Income tax expense for the quarter decreased US$379 million (US$0.67 per share) due to the estimated effects of US tax reform. Excluding the effects of US tax reform, the Company’s effective tax rate would have been 24 percent for the quarter and year.

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