Milling & Baking News - February 13, 2018 - 20

Financial Results

ADM earnings improve in quarter
on cost, capital initiatives
CHICAGO - Against the backdrop of a
possible takeover of Bunge, Archer Daniels Midland Co. on Feb. 6 posted improved earnings for 2017 and the fourth
quarter ended Dec. 31, 2017.
For the year, the company posted net
earnings attributable to ADM of $1,595
million, up from $1,279 million in the prior year. For the quarter, profit increased
to $788 million, up 86% from $424 million
in the same period a year earlier.
"We ended 2017 with a solid fourth quarter," said Juan Luciano, chairman and chief
executive officer. "We pulled the levers under our control - including cost and capital
initiatives and interventions throughout the
year - to deliver value for shareholders.
"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."
Revenue for the year fell 2.5% to
$60,828 million. For the quarter, revenue
decreased 2.7% to $16,070 million.
The company made no mention of a
possible takeover bid for Bunge in its
earnings release, and Mr. Luciano said
he would not comment during a Feb. 6
conference call with analysts. The Wall
Street Journal on Jan. 19 said ADM has
approached Bunge about a possible takeover bid. The Journal suggested a bidding war between ADM and Glencore
PLC, Baar, Switzerland, which made a
takeover bid for Bunge in May.

However, Mr. Luciano highlighted four
components that will help the company in
the coming year, including growth initiatives both organically and through mergers and acquisitions, "particularly on the
right-hand side of the value chain."
Investments will be strategic, he said, because the company wants to invest to plug
holes in its value chain, not just to be big.
"We have a good base from this quarter

'We have a good base from this quarter and this
year in which to build, and we are looking for a
year of solid earnings and e.p.s. growth.'
- Juan Luciano,
Archer Daniels Midland Co.

and this year in which to build, and we
are looking for a year of solid earnings
and e.p.s. growth," Mr. Luciano said.
Operating profit in the Corn Processing
segment increased 29% in fiscal 2017 and
2.4% in the fourth quarter, to $909 million
and $261 million, respectively. 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, ADM said.
Oilseeds Processing profit eased 4.5%
in the full year to $841 million, while
fourth-quarter profit fell 16% to $202 million. Crushing and Origination results
were lower due to weak crush margins,

Soft pretzel sales lift earnings
and sales at J&J Snack Foods
PENNSAUKEN, N.J. - Soft pretzel sales
in both the food service and retail markets contributed to strong earnings and
sales at J&J Snack Foods Corp. in the first
quarter of fiscal 2018.
Net income in the first quarter ended
Dec. 30, 2017, totaled $36,249,000, equal
to $1.94 per share on the common stock,
up 167% from $13,540,000, or 72c per
share, in the first quarter of fiscal 2017.
Net sales increased 18% to $265,210,000
from $225,570,000.
Overall, total food service operating income at J&J Snack Foods decreased 7%
in the first quarter to $15,900,000 from
$17,054,000 in the same period a year ago.
Within the food service division, sales of
20 / February 13, 2018

Milling & Baking News

despite strong crush volumes and continued growth in demand. Origination
results in South America were impacted
by weak margins.
"Throughout the quarter, we continue
to see the indicators of improving global
demand for soybean meal as the effects of
alternate proteins diminish and livestock
numbers continue to increase," Ray Guy
Young, executive vice-president and chief
financial officer, said during the conference call with analysts.
Year-over-year operating profit in the
Ag Services segment increased 2% in fiscal

bakery products totaled $94,933,000, up 26%
from the same period a year ago, while soft
pretzel sales increased 21% to $50,131,000,
and churros increased 1% to $14,592,000.
"Sales of our food service products
improved this quarter with significant
increased sales of soft pretzels in restaurants and movie theaters, funnel cakes
in schools and handhelds to a handful
of customers," Gerald B. Shreiber, chairman, president and chief executive officer, said during a Jan. 30 conference call
with analysts. "Bakery sales, without Hill
& Valley, were essentially flat this quarter
as sales to private label businesses leveled off and sales to schools were down
in the quarter. Sales of our new Brauhaus

2017 to $585 million, while fourth-quarter
profit was up 23%, to $301 million.
Merchandising and Handling earnings
increased 32% in fiscal 2017. The lack of
competitiveness of U.S. grain exports
was offset by solid performance in Global Trade, strong destination marketing
gains, and insurance and other income.
Meanwhile, Milling and Other earnings fell 12% year-over-year due to lower
volumes and margins.
Transportation results decreased from
the prior-year period, due to lower barge
loadings and freight values.
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. MBN
pretzel have been very encouraging."
In the retail supermarket segment, total
operating income totaled $2,558,000, up
145% from $1,046,000 a year ago. Within
the retail supermarket division, sales of soft
pretzels increased 18% to $10,512,000, handhelds dipped 12% to $3,026,000, and frozen
juices and teas decreased 1% to $9,727,000.
"Soft pretzel sales in our grocery and
supermarket segment were up a strong
18% for the quarter, primarily because
of continued increase of sales and the recently licensed Auntie Anne's pretzels,"
Mr. Shreiber said. "Operating income
was up very strong, $1.5 million, because
of the increased soft pretzel sales and because we reduced media spending and
couponing, primarily related to Oreo
Churros and Pillsbury dessert products.
These products have not performed as
well as we had projected." MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - February 13, 2018

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