ADM reported net earnings of $339 million for the quarter ended March 31, 2017, with adjusted earnings per share up 43% over the prior-year quarter.
“Our year-over-year results improved as a company and in all four of our business segments during the first quarter, and we continue to be on course for a stronger 2017,” said ADM Chairman and CEO Juan Luciano. “Ag Services was up for the quarter, with higher results in U.S. grain and transportation operations. The corn business delivered a good quarter, with improved performances across their portfolio. Oilseeds earnings were up, including solid results in global softseeds and from our equity investment in Wilmar. WFSI results were higher, led by WILD Flavors.
“We are continuing to execute the long-term strategic plan that we launched in 2012, and we are seeing the results. We have strengthened our core, improving our cost positions and implementing measures to improve results where necessary. Our operational excellence initiatives have delivered significant savings and efficiencies. And we continue to grow strategically by expanding into new geographies and increasing our capabilities in food, beverage and feed. Those actions contributed to the improved results we saw in the first quarter despite muted margin environments in some businesses. The continued momentum in the execution of our plan gives us confidence that we will deliver sustainable value creation.”
Results of Operations
- Ag Services delivered improved results over the year-ago quarter. In Merchandising and Handling, North America grain showed better results, with improving grain carries and good execution volumes amid strong global demand for U.S. commodities. International merchandising was down from the year-ago quarter due to lack of merchandising opportunities and some unfavorable mark-to-market effects.
- Transportation had a significantly improved quarter, led by our North America barge and stevedoring operations, which capitalized on high volumes versus the prior-year quarter.
- Milling and Other had a solid quarter, but with lower volumes and margins.
- Corn Processing results were significantly better than the year-ago quarter. Sweeteners and starches delivered a strong performance on improved domestic demand and higher volumes and margins from the European business. Bioproducts was up over the previous year, with very strong exports and improved margins driving solid results in ethanol. Animal nutrition was up, with improved margins in lysine offset partially by overall lower sales volumes caused by a mild winter.
- Oilseeds Processing results were up over the first quarter of 2016. Crushing and origination was comparable to the year-ago period: Softseeds results were significantly higher than the previous year, as we took advantage of our softseed processing footprint and flex capacity to capitalize on margin opportunities both in North America and Europe. A competitive global protein meal market continued to pressure soybean crush margins. South America crush and origination was down, as the pace of farmer selling has not kept pace with export demand.
- Refining, packaging, biodiesel and other results declined. Solid EU food oils results were offset by timing effects; North American biodiesel volumes and margins were down, while South American packaged oils and biodiesel improved.
- Results in Asia improved significantly over the prior-year quarter, due to both ADM’s increased ownership stake in, and strong results from, Wilmar.
- WFSI was up over the prior-year quarter. WILD Flavors improved on its solid first quarter in 2016: The EMEAI WILD Flavors business had a very strong March, led by good sales volumes in Africa and the Middle East. The WILD Flavors business in Asia also had a good quarter, thanks to strong sales in China. Specialty ingredients was slightly down for the quarter, as solid protein results in North America were offset by weaker results in some specialty ingredients, including fibers.
Other items of note
Segment operating profit of $676 million as reported for the quarter includes charges of $9 million related to asset impairment and restructuring activities. Prior-year segment operating profit included restructuring charges of $2 million.
The effective tax rate increased approximately 1% due primarily to the expiration of U.S. tax credits including the biodiesel tax credit, partially offset by changes in the forecast geographic mix of earnings.