Net earnings of $386 million, or $0.62 per share
Archer Daniels Midland Company (NYSE: ADM) today reported
financial results for the quarter ended June 30, 2015.
The company reported adjusted earnings per share1 of $0.60, down
from $0.79 in the same period last year. Adjusted segment operating
profit1 was $724 million, down 13 percent from $835 million in the
year-ago period. Net earnings for the quarter were $386 million, or
$0.62 per share, and segment operating profit1 was $808
million.
“Our second-quarter results demonstrate the strength and value
of our geographic and business-portfolio diversity,” said ADM Chief
Executive Officer Juan Luciano. “In Corn, domestic and export
demand for ethanol was robust, but record industry production
limited margins. This was partially offset by strong results from
our corn sweeteners and starches business.
“In Oilseeds, good meal demand supported strong North American
soybean crushing results. And South American origination and export
volumes were up, leading to good throughput at our expanded
origination and port network. These, combined with the flexibility
of our global crush plants, helped the Oilseeds team deliver
another strong performance.
“The WFSI team had an excellent quarter and continues to make
great progress toward achieving their targeted cost and revenue
synergies.
“Ag Services earnings were impacted by lower margins and volumes
of North American exports, as they were less competitive globally,
and by a sharp upward move in commodity prices at the end of the
quarter. But, within our Ag Services segment, the milling business
had record second-quarter results.
“We’ve continued to advance our strategic plan that’s improving
our ROIC and growing our EVA. Among numerous other actions, we
closed the sale of our global chocolate business to Cargill; we
closed the Barcarena port transaction with Glencore in June; and we
remain on track to close both our Eaststarch transaction and the
sale of our global cocoa business later this year.”
Second Quarter 2015 Highlights1
- Adjusted EPS of $0.60 excludes
approximately $0.11 of gains on asset sales and acquisition-related
revaluations, $0.06 of LIFO charges, $0.04 of charges related to
asset impairments and restructurings, and a $0.01 gain related to
effective tax rate adjustment.
- Agricultural Services decreased $57
million as lower global merchandising results and lower earnings
from reduced North American export margins and volumes were
partially offset by record second-quarter profits from milling
operations.
- Corn Processing decreased $80 million
on lower bioproducts results.
- Oilseeds Processing results were solid,
as strong global soy crush and South American origination offset
lower softseed and refining results.
- Wild Flavors and Specialty Ingredients
earned a strong $104 million in the second reporting period for
this business unit.
- Trailing four-quarter-average adjusted
ROIC was 9 percent, up 120 basis points year over year and 240
basis points above annual WACC of 6.6 percent.
- During the first half of 2015, the
company returned $1.5 billion to shareholders through dividends and
the repurchase of 24 million shares.
1 Non-GAAP financial measures; see pages 4 and 9 for
explanations and reconciliations, including after-tax amounts.
Agricultural Services Earnings Decline on Lower Merchandising
Volumes and Margins
Agricultural Services operating profit was $127 million, down
$57 million from the year-ago period.
Merchandising and handling earnings declined $74 million to $41
million. Strong South American exports that benefited the Oilseeds
business segment reduced margins and volumes of North American
exports reflected in Agricultural Services. In addition, Global
Trade Desk profits were negatively impacted by the significant
end-of-quarter increase in certain commodity prices as well as
reduced volumes and margins.
Transportation results declined $8 million to $19 million, amid
lower barge freight demand and increased costs related to
high-water conditions in the U.S.
Milling and other results improved $25 million to $67 million,
due mainly to higher product margins and strong merchandising
results. ADM's global milling operations had record second-quarter
results.
Corn Processing Earnings Decline with Strong Sweetener
Results Offset by Lower Ethanol Results
Corn Processing operating profit decreased from $268 million to
$188 million.
Sweeteners and starches results improved $22 million to $145
million with very good North American sweetener volumes and
margins, good demand for coproducts, and solid results from the
Almex and Eaststarch joint ventures.
Bioproducts results declined from $145 million to $43 million
due to lower ethanol industry margins. Increased ethanol exports
and record U.S. driving miles supported robust demand, but record
industry production resulted in margins lower than the prior year,
though higher than the first quarter.
Oilseeds Earnings Solid as Strong Soy Crush and South
American Grain Origination Offset Lower Softseed and European
Refining Results
Oilseeds operating profit of $301 million increased $4 million
from the year-ago results.
Crushing and origination operating profit increased $35 million
to $198 million. Strong soybean meal demand, combined with ample
global bean supplies, supported strong global soy crush results.
Large South American corn and soybean harvests helped drive volumes
through the origination and recently expanded port operations
there. Lower margins and volumes driven by concerns about seed
supply significantly reduced softseed results.
Refining, packaging, biodiesel and other generated a profit of
$61 million for the quarter, down $27 million from year-ago results
that benefited from $16 million in retroactively applied biodiesel
blender's credits. Strong North American refining margins were
offset by lower results from South America and Europe.
Oilseeds results in Asia for the quarter increased $13 million
from the year-ago period mainly due to improved results from
Wilmar.
Wild Flavors and Specialty Ingredients Delivers Excellent
Second Reporting Quarter
In the second quarter, Wild Flavors and Specialty Ingredients
operating profit was $104 million. Wild Flavors had strong results
in North America, and the specialty proteins business had one of
its best quarters ever.
The business continues its strong progress toward achieving the
cost and revenue synergies identified last year, with nearly 600
projects in the pipeline and more than 50 revenue synergy wins
across the business units and geographies.
Note that when reviewing comparative performance, the
second-quarter 2014 results of ADM and WFSI do not include revenues
or costs of Wild Flavors and SCI, because they were acquired in the
fourth quarter of 2014 and the new segment was created on January
1, 2015.
Other Items of Note
For the second quarter, the effective tax rate was 27 percent,
versus 28 percent in the same period last year.
Segment Operating profit of $808 million as reported for the
quarter includes a gain of $27 million in Agricultural Services
related to purchasing the remaining equity interests in North Star
Shipping and MinMetal; a $6 million gain in Corn Processing from
the sale of the lactic acid business; a $68 million gain in
Oilseeds Processing from the sale of port assets in Brazil to a new
joint venture with Glencore; and impairment charges totaling $31
million, primarily related to certain international Oilseeds
facilities.
As additional information to help clarify underlying business
performance, the tables on page 9 include both adjusted EPS as well
as adjusted EPS excluding significant timing effects.
Conference Call Information
ADM will host a conference call and audio webcast on August 4,
2015, at 8 a.m. Central Time to discuss financial results and
provide a company update. A financial summary slide presentation
will be available to download approximately 60 minutes prior to the
call.
To listen to the call via the Internet or to download the slide
presentation, go to www.adm.com/webcast. To listen by
telephone, dial (888) 522-5398 in the U.S. or (706) 902-2121 if
calling from outside the U.S. The access code is 78998346.
Replay of the call will be available from Aug. 5, 2015, to Aug.
11, 2015. To listen to the replay by telephone, dial (855) 859-2056
in the U.S. or (404) 537-3406 if calling from outside the U.S. The
access code is 78998346. The replay will also be available online
for an extended period of time at www.adm.com/webcast.
Forward-Looking Statements
Some of the above statements constitute forward-looking
statements. ADM’s filings with the SEC provide detailed information
on such statements and risks, and should be consulted along with
this release. To the extent permitted under applicable law, ADM
assumes no obligation to update any forward-looking statements.
About ADM
For more than a century, the people of Archer Daniels Midland
Company (NYSE: ADM) have transformed crops into products that serve
the vital needs of a growing world. Today, we’re one of the world’s
largest agricultural processors and food ingredient providers, with
more than 33,000 employees serving customers in more than 140
countries. With a global value chain that includes more than 460
crop procurement locations, 300 ingredient manufacturing
facilities, 40 innovation centers and the world’s premier crop
transportation network, we connect the harvest to the home, making
products for food, animal feed, chemical and energy uses. Learn
more at www.adm.com.
Financial Tables Follow
Segment Operating Profit and Corporate
Results
A non-GAAP financial measure
(unaudited)
Quarter endedJune 30 Six
months endedJune 30 (In millions) 2015
2014 Change 2015 2014 Change
Agricultural Services
Operating Profit Merchandising and handling (excluding
specified items) $ 41 $ 115 $ (74 ) $ 148 $ 184 $ (36 ) Milling and
other 67 42 25 122 82 40 Transportation (excluding specified item)
19 27 (8 ) 51 60 (9 ) Gain on acquisition/sale of assets* 27 — 27
27 — 27 Asset impairment charges* (2 ) — (2 ) (2 ) —
(2 ) Total Agricultural Services $ 152 $ 184 $ (32 )
$ 346 $ 326 $ 20
Corn Processing Operating
Profit Sweeteners and starches (excluding specified items) $
145 $ 123 $ 22 $ 230 $ 218 $ 12 Bioproducts (excluding timing
effects) 43 145 (102 ) 85 301 (216 ) Gain on sale of assets* 6 — 6
6 — 6 Corn hedge timing effects* 11 70 (59 ) (3 ) 5 (8 ) Asset
impairment charges* (1 ) — (1 ) (1 ) — (1 ) Total
Corn Processing $ 204 $ 338 $ (134 ) $ 317 $
524 $ (207 )
Oilseeds Processing Operating Profit
Crushing and origination (excluding specified items) $ 198 $ 163 $
35 $ 532 $ 324 $ 208 Refining, packaging, biodiesel, and other
(excluding specified items) 61 88 (27 ) 113 173 (60 ) Cocoa and
other (excluding timing effects) 3 20 (17 ) 32 50 (18 ) Asia
(excluding specified item) 39 26 13 107 80 27 Gain on sale of
assets* 68 — 68 68 — 68 Asset impairment charges* (28 ) — (28 ) (28
) (28 ) Biodiesel credits* — (16 ) 16 — (25 ) 25 Cocoa hedge timing
effects* 3 (1 ) 4 (11 ) (25 )
14 Total Oilseeds Processing $ 344 $ 280
$ 64 $ 813 $ 577 $ 236
Wild
Flavors & Specialty Ingredients Operating Profit Wild
Flavors and Specialty Ingredients $ 104 $ 75 $ 29
$ 172 $ 133 $ 39 Total Wild Flavors and
Specialty Ingredients $ 104 $ 75 $ 29 $ 172
$ 133 $ 39
Other Operating Profit
Financial $ 4 $ 11 $ (7 ) $ 15 $ 19 $
(4 ) Total Other $ 4 $ 11 $ (7 ) $ 15 $ 19
$ (4 )
Segment Operating Profit $ 808 $ 888 $
(80 ) $ 1,663 $ 1,579 $ 84 *Memo: Adjusted Segment Operating Profit
$ 724 $ 835 $ (111 ) $ 1,607 $ 1,624 $ (17 )
Corporate
Results LIFO credit (charge) $ (61 ) $ 73 $ (134 ) $ (59 ) $
(86 ) $ 27 Interest expense - net (80 ) (78 ) (2 ) (158 ) (171 ) 13
Unallocated corporate costs (128 ) (109 ) (19 ) (231 ) (189 ) (42 )
Other charges — (31 ) 31 — (31 ) 31 Minority interest and other (13
) (8 ) (5 ) 1 (1 ) 2 Total Corporate $ (282 ) $ (153
) $ (129 ) $ (447 ) $ (478 ) $ 31
Earnings Before Income
Taxes $ 526 $ 735 $ (209 ) $ 1,216 $ 1,101
$ 115 Segment operating profit is ADM’s consolidated
income from operations before income tax excluding corporate items.
Adjusted segment operating profit is segment operating profit
adjusted, where applicable, for specified items and timing effects
(see items denoted*). Timing effects relate to hedge
ineffectiveness and mark-to-market hedge timing effects. Management
believes that segment operating profit and adjusted segment
operating profit are useful measures of ADM’s performance because
they provide investors information about ADM’s business unit
performance excluding corporate overhead costs as well as specified
items and timing effects. Segment operating profit and adjusted
segment operating profit are non-GAAP financial measures and are
not intended to replace earnings before income tax, the most
directly comparable GAAP financial measure. Segment operating
profit and adjusted segment operating profit are not measures of
consolidated operating results under U.S. GAAP and should not be
considered alternatives to income before income taxes or any other
measure of consolidated operating results under U.S. GAAP.
Consolidated Statements of
Earnings
(unaudited)
Quarter endedJune 30 Six months
endedJune 30 2015 2014 2015 2014 (in millions, except
per share amounts) Revenues $ 17,186 $ 21,494 $ 34,692 $ 42,190
Cost of products sold 16,222 20,322 32,626
40,343 Gross profit 964 1,172 2,066 1,847 Selling, general,
and administrative expenses 519 426 1,017 819 Asset impairment,
exit, and restructuring costs 31 31 31 31 Equity in (earnings)
losses of unconsolidated affiliates (87 ) (78 ) (226 ) (210 )
Interest income (21 ) (24 ) (39 ) (46 ) Interest expense 85 79 166
172 Other (income) expense - net (89 ) 3 (99 ) (20 )
Earnings before income taxes 526 735 1,216 1,101 Income taxes (143
) (203 ) (340 ) (301 ) Net earnings including noncontrolling
interests 383 532 876 800 Less: Net earnings (losses) attributable
to noncontrolling interests (3 ) (1 ) (3 ) — Net earnings
attributable to ADM $ 386 $ 533 $ 879 $ 800
Diluted earnings per common share $ 0.62 $ 0.81 $
1.39 $ 1.21 Average number of shares outstanding 627 659 633
661
Other (income)
expense - net consists of:
Gain on sale/revaluation of assets/business (a) $ (101 ) $ (13 ) $
(104 ) $ (34 ) Other - net 12 16 5 14 $
(89 ) $ 3 $ (99 ) $ (20 ) (a) Current period
gain includes disposals in Oilseeds (Q2 $68 million, YTD $70
million) related to the Barcarena export terminal transaction, Corn
(Q2 and YTD $6 million) related to the sale of the lactic business,
and Ag Services (Q2 $27 million, YTD $28 million) related to the
revaluation of the Company's previously held investments in North
Star Shipping and Minmetal in conjunction with the acquisition of
the remaining interest. Prior period gain includes individually
insignificant disposals in Oilseeds (Q2 $0, YTD $15 million), Ag
Services (Q2 $13 million, YTD $20 million), Corporate (Q2 and YTD
$1 million), and a loss in Corn (Q2 $1 million, YTD $2 million).
Summary of Financial Condition
(Unaudited)
June 30,2015 June 30,2014 (in
millions) NET INVESTMENT IN Cash and cash equivalents (b) $ 867 $
1,630 Short-term marketable securities (b) 309 366 Operating
working capital (a) 8,282 11,024 Property, plant, and equipment
9,897 10,110 Investments in and advances to affiliates 3,930 3,617
Long-term marketable securities 492 539 Goodwill and other
intangibles 3,256 555 Other non-current assets 405 451 Net current
assets held for sale 1,229 — $ 28,667 $ 28,292
FINANCED BY Short-term debt (b) $ 157 $ 233 Long-term debt,
including current maturities (b) 6,766 5,389 Deferred liabilities
3,186 2,451 Shareholders' equity 18,558 20,219 $ 28,667
$ 28,292 (a) Current assets (excluding cash and cash
equivalents, short-term marketable securities, and current assets
held for sale) less current liabilities (excluding short-term debt,
current maturities of long-term debt, and current liabilities held
for sale). (b) Net debt is calculated as short-term debt plus
long-term debt, including current maturities less cash and cash
equivalents and short-term marketable securities.
Summary of Cash Flows
(unaudited)
Six months endedJune 30 2015
2014 (in millions) Operating Activities Net earnings $ 876 $ 800
Depreciation and amortization 441 432 Asset impairment charges 31 —
Gain on sale of assets and acquisition (104 ) (34 ) Other - net (50
) (146 ) Changes in operating assets and liabilities (787 ) (69 )
Total Operating Activities 407 983 Investing Activities
Purchases of property, plant and equipment (540 ) (398 ) Net assets
of businesses acquired (69 ) — Proceeds from sale of
business/assets 135 19 Marketable securities - net 190 50 Other
investing activities (123 ) 72 Total Investing Activities
(407 ) (257 ) Financing Activities Long-term debt borrowings
1,244 1 Long-term debt payments (28 ) (1,162 ) Net borrowings
(payments) under lines of credit 50 (129 ) Purchases of treasury
stock (1,164 ) (493 ) Cash dividends (350 ) (315 ) Other 16
(119 ) Total Financing Activities (232 ) (2,217 ) Increase
(decrease) in cash and cash equivalents (232 ) (1,491 ) Cash and
cash equivalents - beginning of period 1,099 3,121
Cash and cash equivalents - end of period $ 867 $ 1,630
Segment Operating Analysis
(unaudited)
Quarter endedJune 30 Six months
endedJune 30 2015 2014 2015 2014 (in '000s metric
tons)
Processed
volumes
Oilseeds 8,438 7,785 17,287 16,474 Corn 5,709 6,336 11,011 12,085
Milling and Cocoa 1,765 1,788 3,515 3,561
Total processed volumes 15,912 15,909 31,813
32,120 Quarter endedJune 30 Six months endedJune 30
2015 2014 2015 2014 (in millions)
Revenues
Agricultural Services $ 7,005 $ 9,230 $ 15,050 $ 18,941 Corn
Processing 2,579 3,219 5,045 6,203 Oilseeds Processing 6,822 8,680
13,115 16,335 Wild Flavors and Specialty Ingredients 682 296 1,288
553 Other 98 69 194 158 Total revenues $
17,186 $ 21,494 $ 34,692 $ 42,190
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
Quarter endedJune 30 Six months
endedJune 30 2015 2014 2015 2014 Reported EPS (fully
diluted) $ 0.62 $ 0.81 $ 1.39 $ 1.21 Adjustments: LIFO (credit)
charge (a) 0.06 (0.07 ) 0.06 0.08 Gain on acquisition/sale of
assets (b) (0.11 ) — (0.11 ) — Asset impairment charges (c) 0.04 —
0.04 — Restructuring/relocation charges (d) — 0.03 — 0.03 U.S.
biodiesel credits (e) — 0.03 — 0.04 Effective tax rate adjustment
(f) (0.01 ) (0.01 ) — (0.02 ) Sub-total adjustments (0.02 )
(0.02 ) (0.01 ) 0.13 Adjusted earnings per share (non-GAAP)
$ 0.60 $ 0.79 $ 1.38 $ 1.34
Memo: Timing effects (gain) loss Corn (g) (0.01 ) (0.07 ) — (0.01 )
Cocoa (h) (0.01 ) — 0.01 0.03 Sub-total timing
effects (0.02 ) (0.07 ) 0.01 0.02 Adjusted EPS
excluding timing effects (non-GAAP) $ 0.58 $ 0.72 $
1.39 $ 1.36 (a) The company’s pretax changes
in its LIFO reserves during the period, tax effected using the
Company’s U.S. effective income tax rate. (b) Current period gain
of $101 million, pretax, primarily related to the revaluation of
the Company’s previously held investments in North Star Shipping
and Minmetal in conjunction with the acquisition of the remaining
interest, the sale of assets to the new Barcarena export terminal
joint venture in Brazil, and sale of the lactic business, tax
effected using the applicable tax rates. (c) Current period charges
of $31 million, pretax, primarily related to certain long-lived
assets, tax effected using the applicable tax rates. (d) Relocation
of the global headquarters to Chicago, IL, costs related to
integration of Toepfer following the acquisition of the
noncontrolling interest, and other restructuring charges totaling
$31 million, pretax, tax effected using the applicable tax rates.
(e) Prior period credits (Q2 $16 million, YTD $25 million, pretax),
(Q2 $19 million, YTD $29 million, after tax) related to U.S.
biodiesel blending credits recorded in a later period. (f) Impact
to EPS due to the change in annual effective tax rate. (g) Corn
timing effects for corn hedge ineffectiveness losses tax effected
using the Company's U.S. effective income tax rate. (h) Cocoa
timing effects tax effected using the Company's effective income
tax rate.
Adjusted EPS and adjusted EPS excluding timing effects reflect
ADM’s fully diluted EPS after removal of the effect on Reported EPS
of certain specified items and timing effects as more fully
described above. Management believes that these are useful measures
of ADM’s performance because they provide investors additional
information about ADM’s operations allowing better evaluation of
ongoing business performance. These non-GAAP financial measures are
not intended to replace or be an alternative to Reported EPS, the
most directly comparable GAAP financial measure, or any other
measures of operating results under GAAP. Earnings amounts
described above have been divided by the company’s diluted shares
outstanding for each respective quarter in order to arrive at an
adjusted EPS amount for each specified item and timing effect.
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Archer Daniels Midland CompanyMedia RelationsDavid
Weintraub312-634-8484orInvestor RelationsMark
Schweitzer217-451-8286
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