Oilseeds profits boost ADM earnings in Q2

by Eric Schroeder
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DECATUR, ILL. — A sharp gain in the company’s Oilseeds Processing segment coupled with the absence of a significant write-down that occurred in last year’s second quarter contributed to an overall earnings gain at Archer Daniels Midland Co. in the second quarter of fiscal 2013.

Net income in the second quarter ended Dec. 31, 2012, was $510 million, equal to 77c per share on the common stock, up from $80 million, or 12c per share, in the same quarter a year. The latest results included 11c per share in LIFO gains and other items that net to about 6c per share. The prior-year results included 6c per share in LIFO charges and 33c per share in asset impairment charges. ADM’s adjusted earnings per share was 60c, up from 51c per share a year ago.

Net sales in the second quarter were $24,921 million, up 7% from $23,306 million in the same period a year ago.

“The ADM team managed well despite challenges from the U.S. drought and from persistent, negative margins in the ethanol industry,” said Patricia Woertz, chairman and chief executive officer. “Our results in Oilseeds and Agricultural Services demonstrated the ability of our people to use our global asset network to prepare for and manage in a range of market conditions.

“In North America, we fully utilized our oilseeds crushing capacity to meet strong global demand, and we adjusted our transportation and origination network to move goods efficiently despite constrained river traffic and a smaller corn crop. In South America, we leveraged our origination, transportation and export facilities to move the record corn crop to world markets. And, in Europe, we made some operational changes, and the market responded to reduced imports.

“During our abbreviated fiscal year, we drove meaningful improvements in capital, costs and cash to enhance our future competitiveness. We continued taking action to improve underperforming businesses. As part of our ongoing portfolio management, we sold $570 million of non-core investments. And, through a companywide focus, we unlocked more than $1 billion in working cash.”

ADM’s Oilseeds Processing segment posted a profit of $411 million, up 97% from $209 million. Results included unfavorable mark-to-market timing effects of about $50 million, which compared with an unfavorable impact of about $110 million in the year-ago period, ADM said.

Sales and other operating income in the Oilseeds Processing segment rose 2% to $8,364 million. Crushing and origination operating profit totaled $261 million in the second quarter, up 116% million from a year ago on strong improvements in all three geographies. ADM said its U.S. soybean operations ran at record capacity during the quarter and delivered strong results amid good domestic and export meal demand. ADM said cocoa and other results increased $66 million during the quarter, as weaker cocoa press margins were offset by the absence of last year’s significant negative mark-to-market impacts.

Corn Processing results were weak in the quarter on continued ethanol industry challenges, ADM said. Operating profit for the segment during the quarter was $3 million, which compared with a loss of $129 million a year ago. Last year’s results included $339 million in restructuring and exit costs.

Net sales and other operating income in the segment fell 4% to $3,041 million from $3,158 million. Within the segment, sweeteners and starches profit rose 29% to $97 million from $75 million, but bioproducts suffered a loss of $94 million after posting a profit of $135 million in the second quarter of fiscal 2012.

The company’s Agricultural Services segment posted an operating profit of $317 million, up 32% from $240 million in the second quarter of fiscal 2012. Sales and other operating income in the segment increased 14% to $13,485 million from $11,854 million. ADM noted milling and other results remained steady, as the milling business continued to perform well.

 The ADM Other segment recorded an operating profit of $77 million in the second quarter of fiscal 2013, up from $22 million a year ago. Sales and other operating income in the segment rose 11% to $31 million from $28 million.

For the first six months of fiscal 2013, overall net income at ADM was $692 million, or $1.05 per share, up 28% from $540 million, or 81c per share, in the same period a year ago. Net sales and other operating income was $46,729 million in the first half of fiscal 2013, up 3% from $45,208 million.
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