ADM: Reports Strong Adjusted Q4/2013 Earnings

Decatur / IL. (adm) Archer Daniels Midland Company (ADM) reported financial results for the quarter ended Dec. 31, 2013. The company reported adjusted earnings per share1 of 0,95 USD, up 58 percent from the 0,60 USD in the same period last year. Net earnings for the quarter, which were negatively impacted by charges related to GrainCorp and to ADM´s Brazilian sugar mill, were 374 million USD or 0,56 USD per share, down from 0,77 USD per share in the same period one year earlier. Excluding specified items, segment operating profit1 was 1,0 billion USD, up 33 percent.

«The team delivered a strong finish to the year», said ADM Chairman and CEO Patricia Woertz. «Lower corn costs and improved ethanol margins helped support a significant improvement in our Corn business. Our great Oilseeds performance was driven by our ability to meet robust global demand for meal and by improved bio-diesel results in North America and Europe. However, our Ag Services business was impacted by the slow farmer-selling of corn and challenges in international merchandising».

«Looking back on the year, the team made meaningful progress in our efforts to improve cost, cash and capital management. We are ahead of schedule in our cost savings efforts. We completed a two-year program to unlock cash from our balance sheet. We carefully managed capital spending and announced a balanced capital plan for 2014».

«Looking ahead, we continue to see strong global demand for our products and large crop supplies. We expect continued good utilization of our North American network until South America´s large harvest reaches global markets».

Fourth Quarter 2013 Highlights

  • Adjusted EPS of 0,95 USD per share excludes 0,25 USD per share in specified GrainCorp-related items, impairment charges of 0,11 USD per share and other items totalling 0,03 USD per share.
  • Oilseeds Processing performed well, with profits increasing 67 million USD, including strong bio-diesel results.
  • Corn Processing continued to improve. Excluding specified items, profit increased 296 million USD as lower corn costs and good domestic and export demand improved ethanol margins.
  • Agricultural Services profit (excluding GrainCorp-related specified items) declined 54 million USD. Operating results were diminished by lower U.S. merchandising profits and poor international merchandising results.
  • During the quarter, ADM announced a 26 percent increase in common-stock dividends and the intent to repurchase 18 million shares by the end of 2014.
  • During the year, ADM carefully managed capital expenditures, investing 957 million USD.

Oilseeds Earnings Strong

Oilseeds operating profit in the fourth quarter was 478 million USD, up 67 million USD from the same period one year earlier. Crushing and origination operating profit was 252 million USD, comparable to last year´s strong quarter. ADM´s North America soybean crushing operations had strong margins as they processed record volumes amid solid domestic and export demand. South American earnings improved on strong crushing and origination results and solid contributions from ADM´s crushing facility in Paraguay. Refining, packaging, bio-diesel and other generated a profit of 168 million USD for the quarter, up 118 million USD on strong performance across the food-ingredient businesses and improved bio-diesel results in North America and Europe. Cocoa and other results declined as the peanut business delivered lower earnings than the very strong performance in the year-ago quarter. In addition, the cocoa business saw negative mark to market timing effects increase by 15 million USD from the year-ago period. However, the underlying cocoa business has improved. Oilseeds results in Asia for the quarter were up four million USD from the same period last year, principally reflecting ADM´s share of the improved results from Wilmar International Limited.

Corn Processing Results Up Significantly

Corn processing operating profit of 315 million USD represented an increase of 296 million USD from the same period one year earlier. These numbers exclude specified items, including an impairment related to the Brazilian sugar mill. Corn hedge timing effects were a positive impact of 25 million USD, versus a negative impact of 16 million USD in the year-ago period. Sweeteners and starches results rose 68 million USD to 181 million USD, as net corn costs improved dramatically and overall demand remained seasonally solid. Bio-products results increased 228 million USD to 134 million USD, with strong domestic and international demand for ethanol driving significantly improved margins.

Agricultural Services Impacted

Agricultural Services operating profit in the fourth quarter was 201 million USD, down 54 million USD from the same period one year earlier. These numbers exclude specified items, mostly related to GrainCorp. Merchandising and handling earnings declined 45 million USD to 84 million USD on poor international merchandising results and lower U.S. merchandising profits from slower farmer-selling of corn and from fewer wheat merchandising opportunities. International merchandising results were reduced by merchandising and execution issues. Transportation results were flat at 47 million USD. Milling and other results remained solid as the milling business continued to perform well.

Other Items of Note

The effective tax rate for the calendar year was 33 percent, compared to 30 percent in the prior year. This year´s rate was negatively impacted by valuation allowances on deferred tax assets and a shift in the geographic mix of earnings, offset partially by some favorable income tax adjustments related to U.S. bio-diesel tax credits. Excluding these factors, the effective tax rate for the calendar year was 30 percent. For 2014, the company is planning its effective tax rate at around 30 percent.

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