Archer Daniels Midland Company today reported third quarter earnings of $.58 per share, $.59 per share on an adjusted basis, for the quarter ended Sept. 30, 2016. Net earnings were $341 million.

Segment operating profit of $645 million as reported for the quarter includes charges of $2 million in ag services related to asset impairment and restructuring; charges of $2 million in corn processing primarily related to a $4 million final settlement of sales proceeds from the Brazilian sugar ethanol disposal, partially offset by hedge timing gains; and a $1 million restructuring charge in oilseeds.

In addition, corporate results include $74 million in legal settlements and related fees, impairment charges and losses on sales of various equity investments.

Comments

“After working through the challenging environment in the first half of the year, we capitalized on improving operating conditions in the third quarter and are positioned well for a solid finish to the year,” said ADM Chairman and CEO Juan Luciano. “Ag Services results were driven by U.S. exports that surged through the quarter, creating improved merchandising opportunities as the global market relied heavily on U.S. exports of corn and soybeans. Results for corn included strong performance in North American sweeteners and starches, growth from our international corn operations and steady results for bioproducts. Oilseeds results were impacted by significantly lower global soy crushing margins, weaker origination results in Brazil and the unusual equity loss from our Wilmar investment. WFSI results included strong growth from WILD Flavors with mixed results from our specialty ingredients businesses.

“We continued to execute our strategic plan in the quarter. We acquired Caterina Foods, a manufacturer of specialty gluten-free and high-protein pastas. In addition, we further invested in Asia’s growing and evolving food demand by increasing our strategic ownership stake in Wilmar to 23%. Our ethanol dry mill review has progressed and we are targeting receipt of final proposals from a short list of interested parties by the end of the calendar year. And, we have implemented nearly $250 million of new run-rate savings actions through the third quarter and expect to exceed our $275 million target by the end of the calendar year. In line with our balanced capital allocation framework, we have returned $1.3 billion to shareholders in dividends and share buybacks through the first nine months of the year.

“With improving market conditions and a large U.S. harvest, combined with the team’s solid execution capabilities, we feel good about the remainder of the year and a stronger 2017.”

Results of Operations

-In Ag Services, merchandising and handling results were up due to increased volumes and improved margins as crop shortages in South America accelerated this year’s seasonal shift in global demand to North America. The global trade desk results were lower in the quarter as some commodity prices declined, causing global buyers to draw down their inventories, which limited merchandising opportunities.

-Transportation results improved due to strong exports and improved freight rates.

-Milling and other continued to perform well with another solid quarter, consistent with the year-ago period, on strong product margins related to seasonal demand.

-In corn processing, sweeteners and starches results improved as the North American business continued to perform well with solid demand, production efficiencies and improved raw material costs. The company’s results from its international corn operations improved in the quarter. Bioproducts results, excluding last year’s Brazilian sugar impairment charge, were essentially flat with improved operational performance and margins from animal nutrition, offset by slightly lower ethanol results compared to last year.

-In oilseeds processing, crushing and origination results declined significantly versus a very strong year-ago quarter due to lower soy crush margins. In addition, origination volumes were lower due to reduced Brazilian soybean and corn crops.

-Refining, packaging, biodiesel and other results were up from the year-ago quarter due to solid results in biodiesel, specialty fats and oils and better Golden Peanut and Tree Nuts margins.

-Oilseeds results in Asia for the quarter declined from the year-ago period, primarily due to Wilmar’s unusual equity loss in the second quarter. ADM records its share of Wilmar’s results on a one-quarter lag basis and recorded a $48 million equity loss in the third quarter, compared to income of $36 million in the third quarter one year ago.

-WFSI results were up slightly versus the year-ago quarter with strong operating profit growth in flavors and ingredient systems, and the integration of Eatem Foods, offset by mixed results from the specialty ingredients businesses and some start-up items.

Source: ADM