ADM Earnings Fall in Q4

“In a challenging fourth quarter, solid results from our global oilseeds business, particularly in South America, were more than offset by negative U.S. ethanol margins and weaker U.S. merchandising results,” said ADM Chairman and CEO Patricia Woertz.

2 Aug 2012 --- Archer Daniels Midland Company has reported financial results for the quarter ended June 30, 2012. The company reported net earnings for the quarter of $284 million, or $0.43 per share, down from $0.58 per share in the same period one year earlier. Adjusted earnings per share were $0.38. Segment operating profit was $544 million.

For the fiscal year ended June 30, 2012, net earnings were $1.2 billion, or $1.84 per share. Adjusted earnings per share were $2.25. Segment operating profit was $2.5 billion.

“As we look ahead, while drought has reduced the potential size of the U.S. corn crop, we are tracking the development of other crops in North America and Europe,” added Woertz. “While U.S. crop carryouts are expected to be low, we have an experienced business team to manage through this environment.

“Conditions like these demonstrate the vital role of our global agribusiness. As weather has regional effects on crops, we respond by working with our customers to provide the best alternatives to meet their needs from all growing regions of the world.”

Fourth Quarter 2012 Highlights
• Adjusted EPS of $0.38 excludes a LIFO credit of $0.05 per share.
• Oilseeds Processing performed well; the decline of $118 million was primarily due to the absence of significant favorable timing effects and weaker results in cocoa and other.
• Corn Processing results decreased $48 million as negative ethanol margins more than offset improved results from sweeteners and starches.
• Agricultural Services profit fell $222 million, as tight U.S. crop supplies impacted both export volumes and U.S. merchandising results.
• Other Financial results increased $11 million on lower insurance loss reserves.
• ADM returned $160 million to shareholders in the quarter. For the fiscal year, ADM returned nearly $1 billion to shareholders.

Adjusted EPS decreased primarily due to lower segment operating profit, partially offset by lower corporate expenses.

The effective tax rate for the quarter was 30 percent, resulting in an annual rate of 30 percent.

Oilseeds operating profit in the fourth quarter was $331 million, down $118 million from the same period one year earlier.

Crushing and origination operating profit was $150 million, down $76 million from the year-ago quarter. Significantly improved South American soybean and origination results were offset by lower North American softseeds crushing margins, and the absence of favorable mark-to-market timing effects in Europe that benefited the prior year. The net decrease in results from timing effects was approximately $70 million.

Refining, packaging, biodiesel and other generated a profit of $84 million for the quarter, down $6 million mainly on weaker biodiesel results from Europe.

Cocoa and other results declined $19 million, primarily due to weaker cocoa press margins in the quarter.

Oilseeds results in Asia for the quarter were down $17 million from the prior year’s fourth quarter, principally reflecting ADM’s share of the results from its equity investee Wilmar International Limited.

Corn processing operating profit was $74 million, a decrease of $48 million from the same period one year earlier.

Sweeteners and starches operating profit increased $124 million to $135 million, amid continued good sweetener export demand and higher average selling prices. The year-ago quarter’s results were negatively impacted by higher net corn costs related to the timing effects of economic hedges, whose mark-to-market gains were recognized earlier in the fiscal year.

Bioproducts results in the quarter decreased $172 million to a loss of $61 million. Significantly weaker ethanol results more than offset improvements in other bioproducts businesses. Industry ethanol replacement margins were negative throughout the quarter, as the industry supply continued to exceed demand.

Agricultural Services operating profit was $123 million, down $222 million from the same period one year earlier.

Merchandising and handling earnings fell $152 million to $30 million due to lower U.S. merchandising results and lower U.S. crop supplies, which reduced North American export volumes. Results for the quarter also reflected an increase in loss provisions of approximately $40 million.

Transportation results increased $5 million to $17 million.

Excluding last year’s $78 million gain related to ADM’s share of Gruma S.A.B. de C.V.’s sale of assets, Milling and other results were steady.

In the fourth quarter, operating profit from ADM’s Other Financial businesses was $16 million, up $11 million from the same period one year earlier. The improvement was primarily a result of lower captive insurance loss reserves, and better results at ADM Investor Services.

The smaller South American spring harvest means that the U.S. is currently the primary global supplier of soybeans and meal. U.S. corn and soybean yields have been reduced by drought; wheat was less affected. Generally high crop prices will encourage large planted acreage in South America. Global protein meal demand remains good. Poor margins have lowered U.S. ethanol industry production which is reducing inventories. Demand for corn sweeteners remains solid, supported by exports.