ADM Earnings Fall on Lower North American Exports
On November 3, Archer Daniels Midland (ADM) reported that the company’s earnings for the third quarter fell by 66% year on year from $747 million, or $1.14 per share, to $252 million, or 41 cents per share.
Earnings for the first nine months of the year were also down year on year, coming in at $1.1 billion or $1.80 per share – down from $1.5 billion or $2.35 per share for the first nine months the year before.
Although global demand remained steady throughout the third quarter, global bumper crops of grain and high inventories, combined with a weak Brazilian real driving farmers to sell their crops, and a strong U.S. dollar cutting into the competitiveness of U.S. grain exports, especially wheat and corn, had a contracting affect upon ADM’s business.
Corn processing operating profits for the third quarter fell from $341 million to $165 million year on year, despite processed volumes increasing from 7,235,000 tons to 7,705,000 tons.
Bioproducts results for the quarter plunged from $183 million to $40 million year on year due to lower margins in the ethanol industry. Although demand was strong, so was production, creating high inventories, pushing margins below last year’s levels.
Oilseed operating profits for the quarter fell by $72 million from the same quarter a year before to $276 million, however oilseed profits in Asia for the quarter increased by $7 million due to improved results from Wilmar.
“In Oilseeds, good global meal demand again supported soy crushing results, and solid origination volumes contributed to our South American operations, while continued weak oil demand—particularly outside the U.S.—weighed on our softseeds business,” said Juan Luciano, ADM chief executive.
Crushing and origination operating profits for the third quarter fell by $39 million from a year before to $175 million. Strong demand in the U.S. and nearby markets supported North American crushing operations, however low demand for vegetable oil cut into margins and processing volumes, especially in Europe, while the weak real supported origination and export margins for corn and soybeans from South America.