ADM Profit Jumps on Exports and Cost Cuts

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Archer Daniels Midland Co. (NYSE: ADM) reported third-quarter 2016 earnings before markets opened Tuesday. The agribusiness giant posted adjusted diluted earnings per share (EPS) of $0.59 on revenues of $15.83 billion. In the same period a year ago, the company reported $0.60 in EPS on revenues of $16.57 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.46 and revenues of $16.21 billion.

On a GAAP basis, EPS totaled $0.58, which excludes approximately $0.09 per share of LIFO inventory credits and $0.08 of charges related to asset impairments, restructuring, and settlements and %0.02 of other charges.

The company did not offer financial guidance in its press release, but consensus estimates for the fourth quarter of 2016 call for EPS of $0.88 on revenues of $17.22 billion. For the full year, analysts expect EPS of $2.19 on revenues of $63.29 billion.

In the company’s four divisions, adjusted operating profits rose from $149 million in the year-ago quarter to $195 million in Ag Services, rose from $165 million to $214 million in Corn Processing, and tumbled from $276 million to $145 million in Oilseeds Processing. Profits rose from $70 million to $73 million in the Wild Flavors and Specialty Ingredients division.

Chairman and CEO Juan Luciano said:

After working through the challenging environment in the first half of the year, we capitalized on improving operating conditions in the third quarter and are positioned well for a solid finish to the year. Ag Services results were driven by U.S. exports that surged through the quarter … . Results for Corn included strong performance in North American sweeteners and starches … . Oilseeds results were impacted by significantly lower global soy crushing margins, weaker origination results in Brazil and the unusual equity loss from our Wilmar investment. WFSI results included strong growth from WILD Flavors with mixed results from our specialty ingredients businesses. … With improving market conditions and a large U.S. harvest, combined with the team’s solid execution capabilities, we feel good about the remainder of the year and a stronger 2017.

Luciano also noted that the company expects to exceed its fiscal-year goal of $275 million in run-rate savings.

ADM’s shares closed down less than 0.1% Monday, at $43.57 in a 52-week range of $29.86 to $45.39. Shares traded up about 2.6% in Tuesday’s premarket at $44.68. The 12-month price target on the stock was $44.67 before the report.