Milling & Baking News - August 15, 2017 - 16

Financial Results X

Grain, corn processing divisions
boost ADM adjusted earnings
CHICAGO - Net income at Archer Daniels Midland Co. in the second quarter
ended June 30 totaled $276 million, equal
to 48c per share on the common stock,
down 3% from $284 million, or 48c per
share, in the same period a year ago. Excluding asset impairments, restructuring
and settlement activities, as well as a LIFO
charge and a loss on the sale of assets and
businesses, adjusted earnings per share
were 57c, up from 41c in the same period
a year ago. Revenues decreased 4% to
$14.943 billion from $15.629 billion.
"I'm extremely proud of the results our
team achieved this quarter," Juan Luciano, chairman and chief executive officer,
said during an Aug. 1 conference call with
analysts. "Under some tough conditions,
we were able to deliver strong growth in
earnings and returns. In fact, it was our
fourth consecutive quarter of year-overyear higher returns on invested capital.
We did this by continuing to deliver on
our strategic plan and capitalizing on improving conditions in some markets."
Operating profit in the Oilseeds

Processing unit was $206 million in the
second quarter, down 12% from $235 million in the same period a year ago. Crushing and origination profit fell to $38 million from $135 million.
"In Oilseeds Processing, the business
benefited from diversity of feedstocks,
products and geographies," Mr. Luciano
said. "However, overall results were
down compared to the second
quarter of 2016. Crushing origination results were lower. Global
crush margins remain pressured
due to alternative protein substitutes, slower first-half growth in
meal demand, and a competitive
global marketplace.
"In South America, when the
Brazilian real dropped in value for a brief
time in May, we saw more aggressive
farmer selling. But in general throughout
the quarter the real remained firm, contributed to compressed South American
origination margins.
"On the other hand, our softseeds performance improved over the previous

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year as we continued to utilize our flex
crush capacity to capitalize on margin opportunities."
Agricultural Services operating profit
increased 91% to $109 million from $57
million, as merchandising and handling
posted a profit of $40 million after sustaining a loss of $14 million in the year-ago period. Milling and other results rose to $58
million from $56 million, and transportation fell to $11 million from $15 million.
"North America grain results increased
significantly over the prior year with
strong carries in wheat, corn (and)
soybeans," Mr. Luciano said. "We
are seeing the benefits of our actions to improve the performance
of the global trade desk. The group
generated solid profitable results
and was up over the year-ago
quarter. Good execution led to
improved margins that more than
offset some lower volumes. In addition,
favorable timing effects benefited results."
Operating profit within the Corn Processing unit increased 37% to $224 million
from $163 million. Sweeteners and starches
results improved $16 million to $198 million behind higher volumes and improved
margins. Bioproducts turned in a profit of
$26 million, which compared with a loss of
$19 million a year ago, due primarily to an
improvement in ethanol margins.
"Our global sweeteners and starches
business performed very well," Mr. Luciano said. "Higher volumes and improved margins in North America sweeteners and starches contributed to a strong
performance. In addition, our European
operations showed positive growth as a
result of increased sales volumes. Results
from our sweetener complex in Tianjin,
China, improved modestly over the yearago quarter with good growth in sales
volumes, reaching full utilization levels
during the quarter."
Looking forward, Mr. Luciano said
ADM is "aggressively" managing costs
and capital, and taking additional portfolio actions.
"We are ahead of pace for meeting
our 2017 target of $225 million in run
rate savings," he said. "We implemented over $130 million in operational run
rate cost savings during the first half of
the year while continuing to invest in
R.&D., innovation centers and process
improvements. And, in line with our
balanced capital allocation framework,
we returned $875 million to shareholders in dividends and share repurchases.
Because of all these actions, we expect to
deliver a strong year-over-year earnings
growth and returns in 2017. And we are
poised to be an even stronger company
in 2018." MBN
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Milling & Baking News - August 15, 2017

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