Commodities & Metals

ADM Profit Plunges 48%

Archer Daniels Midland Co. (NYSE: ADM) reported first-quarter 2016 earnings Tuesday. The agribusiness giant posted adjusted diluted earnings per share (EPS) of $0.42 on revenues of $14.38 billion. In the same period a year ago, the company reported EPS of $0.81 on revenues of $17.51 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.45 and $17.02 billion in revenues.

On a GAAP basis, EPS totaled $0.39, which excludes approximately $0.02 of last-in, first-out (LIFO) inventory credits and $0.01 of charges related to asset impairments. Adjusted EPS does include a loss of $0.08 per share related to an updated portfolio investment valuation for a joint-venture investment.

The company did not offer financial guidance in its press release, but the consensus estimates for the second quarter of 2016 call for EPS of $0.57 on revenues of $16.71 billion. For the full 2016 fiscal year, analysts expect EPS of $2.48 on revenues of $67.09 billion.

In the company’s four divisions, operating profits slipped in from $194 million in the year-ago quarter to $75 million in Ag Services, rose from $113 million to $131 million in Corn Processing and tumbled from $469 million to $260 million in Oilseeds Processing. Profits rose from $68 million to $70 million in the Wild Flavors and Specialty Ingredients division.

Chairman and CEO Juan Luciano said:

Challenging market conditions continued in the first quarter, particularly affecting Ag Services. Low U.S. export volumes and weak margins continued, and in the quarter, poor results from the global trade desk impacted results for Ag Services. Results for Corn improved compared to the first quarter one year ago, led by a strong performance in sweeteners and starches. For Oilseeds, global protein demand remained solid. However, first quarter results were impacted by weak global crush margins. … The first half of the year continues to present a challenging environment. However, we are cautiously optimistic that reduced South American soybean and corn production could bring improved soybean crush margins and merchandising opportunities in the second half of the year.

ADM’s shares closed up 0.8% Monday afternoon at $40.26 in a 52-week range of $29.86 to $53.31. Shares traded down about 2% in Tuesday’s premarket at $39.45. The consensus price target on the stock was $36.60 before the report.