ADM: Reports First Quarter 2018 Earnings

Chicago / IL. (adm) Archer Daniels Midland Company (ADM) reported financial results for the quarter ended March 31, 2018. «The team executed exceptionally well in the first quarter, and we harvested the benefits of the strategic actions we took over the last few years, delivering strong results», said ADM Chairman and CEO Juan Luciano.

«Looking forward, we are focusing our growth efforts on five key platforms—animal nutrition, bioactives, carbohydrates, human nutrition and taste—as well as geographic regions that are seeing increasing consumer demand. And, through Readiness, we are enhancing our agility, streamlining and standardizing our processes, and implementing innovative technologies for our business and our customers.

«The consistent execution of our strategic plan, combined with our first quarter results, improving market conditions for many of our businesses, and the benefits of U.S. tax reform, lead us to be even more confident about 2018».

First Quarter 2018 Highlights

(Amounts in millions except per share data)			2018					2017
Earnings per share (as reported)			USD	0.70				USD	0.59
Adjusted earnings per share			USD	0.68				USD	0.60
Segment operating profit			USD	704				USD	676
Adjusted segment operating profit			USD	717				USD	678
– Origination			45					47
– Oilseeds			350					313
– Carbohydrate Solutions			213					211
– Nutrition			96					77
– Other			13					30

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• EPS as reported of USD 0.70 includes a USD 0.02 per share charge related to asset impairment and restructuring activities, a positive USD 0.03 per share tax adjustment related to U.S. tax reform, and a positive USD 0.01 per share adjustment related to LIFO. Adjusted EPS, which excludes these items, was USD 0.68.1
• Reported and adjusted earnings include negative mark-to-market timing effects in Oilseeds and Origination, largely offset by approximately USD 120 million of income from the 2017 U.S. biodiesel tax credit.

Results of Operations

Origination results were in line with the prior year. Negative timing effects that impacted the quarter’s performance are expected to reverse in future quarters as contracted agreements are executed.

Merchandising and Handling was up significantly year-over-year. Global Trade had higher margins and increased volumes, resulting in a significant turnaround compared to the year-ago period. North American Grain was down compared to the first quarter of 2017 on lower U.S. export volumes and approximately USD 40 million of mark-to-market effects on existing contracts due to improvements in forward export margins and barge freight rates; those impacts are expected to reverse in future quarters as contracts are executed.

Transportation was down due to high river levels, resulting in increased operating costs.

Oilseeds results were up over the first quarter of 2017.

Global market dynamics continued to push soybean crush margins higher, and the company set crush volume records in North and South America. Improving crush margins resulted in negative timing effects of more than USD 100 million on forward hedges, which led to Crushing and Origination results that were lower than the year-ago period; the majority of those impacts are expected to reverse over the course of 2018. South America saw strong origination volumes and improving margins as farmer selling accelerated. Softseeds were down on lower margins.

Refining, Packaging, Biodiesel and Other results were substantially higher on approximately USD 120 million of income due to the passage of the 2017 biodiesel tax credit.

Asia was lower on Wilmar results.

Carbohydrate Solutions results were in line with the year-ago quarter.

Starches and Sweeteners was up over the prior year on increasing contributions from the Chamtor acquisition and solid results from joint ventures in North America, as well as improved results from starches and dry sweeteners. Wheat Milling was up, benefiting from stronger margins.

Bioproducts results were down versus the year-ago quarter in a pressured ethanol industry margin environment.

Nutrition was up versus the year-ago period.

WFSI results were in line with the first quarter of 2017. WILD had another quarter of double-digit profit increases versus the prior-year period, offset by some weakness in Specialty Ingredients.

Animal Nutrition was up significantly over the first quarter of 2017 with strong trade sales, and a good product mix with strong margins.

Other results decreased due to lower underwriting performance in captive insurance operations and lower results at ADM Investor Services.