ADM reports second quarter earnings, announces cash dividend

ADM reports second quarter earnings, announces cash dividend

Merchandising and handling earnings declined due to slim margins in U.S.

Updated with ADM declaring dividend.

Archer Daniels Midland Company’s Board of Directors has declared a cash dividend of 30 cents per share on the company’s common stock payable on Sept. 7, 2016, to shareholders of record on Aug. 17, 2016.

This is ADM’s 339th consecutive quarterly payment, a record of 84 years of uninterrupted dividends. As of June 30, 2016, there were 583,206,598 shares of ADM common stock outstanding.

Archer Daniels Midland Company reported financial results for the quarter ended June 30, 2016 on Aug. 2.

Second Quarter 2016 highlights

ADM reported second quarter earnings of $0.48 per share, $0.41 per share on an adjusted basis. (ADM photo)

-EPS as reported of $0.48 includes a $0.09 per share charge related to LIFO, $0.17 per share of gains related to sales or revaluation of assets, and other charges of $0.01 per share. Excluding these items, adjusted EPS is $0.41.

-Trailing four-quarter-average adjusted ROIC was 5.7%, 90 basis points below their annual WACC of 6.6%.

-During the first six months of 2016, the company returned $0.8 billion to shareholders through dividends and share repurchases.

- Net earnings were $284 million

Comments

“After a challenging start to the year, general market conditions began to turn at the end of the second quarter, providing us with improved opportunities for the second half of the year,” said ADM Chairman and CEO Juan Luciano. “Weak grain handling margins and merchandising results continued for ag services. Results for corn included strong performance in sweeteners and starches offset by lower ethanol results. Our oilseeds operations leveraged their flex capacity to crush record volumes of soybeans in the second quarter as global protein demand continues to grow. WFSI saw strong growth in flavors and systems, with operating profit in line with the year-ago quarter.

“During the quarter, we continued to advance our strategic plan, acquiring full ownership of Amazon Flavors, a leading Brazilian manufacturer of natural extracts, emulsions and compounds,” Luciano said. “We added soybean crushing capability to our facility in Straubing, Germany, allowing us to utilize flex capacity while also meeting growing customer demand for non-GMO soybean meal and oil in Western Europe. We continued to invest in Asia’s growing and evolving food demand by further increasing our strategic ownership stake in Wilmar from 20% to 22%. In addition, we continue to make progress in the strategic review of our ethanol dry mills. We have implemented almost $150 million of new run-rate savings actions in the first half of the year and remain on track to meet our $275 million target by the end of the calendar year. Also, we repurchased about $500 million of shares in the first half as we continue to execute on our balanced capital allocation framework.”

Results of Operations:

In Ag Services, merchandising and handling earnings declined primarily due to compressed margins across the U.S. grain handling network. Excluding the valuation gain booked last year related to the acquisition of the company’s Romanian port, international merchandising results were up due to stronger origination results in Argentina and the addition of destination marketing in Egypt through the Medsofts joint venture.

Transportation results declined due to weak barge demand and lower freight rates.

In Milling and other, ADM Milling had a strong second quarter on solid volumes and margins.

In Corn Processing, sweeteners and starches results increased as the business continued to perform well with higher volumes and pricing, and improved margins from optimizing product grind in the company’s corn wet mills. The integration of the recent Eaststarch and Morocco acquisitions has gone better than planned, contributing to the company’s global sweeteners and starches portfolio and results.

Bioproducts results were down in the quarter. With ethanol margins continuing to be weak coming into the quarter due to high industry inventory levels, the company decreased production.

Lysine results continued to be pressured by large global production, particularly early in the quarter. However, results improved late in the quarter as global inventories declined and strong demand continued.

In Oilseeds Processing, crushing and origination operating profit declined driven primarily by continued weak canola margins as well as lower soy crush margins, which were historically high last year. The company achieved record soy crush volumes in North America and Europe through increased utilization of new flex capacity.

Refining, packaging, biodiesel and other results were down from one year-ago mainly due to biodiesel timing effects, despite strong results in Specialty Fats and Oils and Golden Peanut.

Oilseeds results in Asia for the quarter improved slightly from the year-ago period, partially due to Wilmar’s first quarter equity earnings.

Source: Archer Daniels Midland Company

Related articles:

ADM reported a lower than expected quarterly profit. Net earnings were $386 million, or 62 cents per share, a year earier. - St. Louis Post-Dispatch

ADM reported a 26% decrease in quarterly profit. - Reuters

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