“The team delivered solid operating results overall, despite the lingering effects of the 2012 U.S. drought,” said ADM Chairman and CEO Patricia Woertz. “Oilseeds performed well, particularly in North and South America; Corn benefitted from improved ethanol margins; and Ag Services managed effectively through the transition to new crop.
“Looking forward, as record global crop supplies refill the pipeline, we will employ our efficient network to meet strong demand from customers around the world.”
Third Quarter 2013 Highlights
- Adjusted EPS of $0.46 excludes approximately $298 million in pretax LIFO credits, or $0.28 per share, and other items totaling ($0.02) cents per share.
- Oilseeds Processing profit increased $25 million as North American operations effectively managed through the transition between old and new crop.
- Corn Processing profit increased $91 million on improved results from ethanol.
- Agricultural Services profit declined $122 million when adjusting for impairment charges in the year-ago quarter. Current-period performance was impacted by low U.S. exports and weak international merchandising results.
- ADM’s net debt continued to fall, reflecting strong cash flows from lower commodity prices and a focus on cash generation. Net debt reached $3.4 billion, down from $8.8 billion a year ago.
Adjusted EPS of 46 Cents, down 7 Cents
Adjusted EPS decreased primarily due to lower Agricultural Services operating profit.
This quarter, the company’s estimate of its full-year effective tax rate was 30 percent. This quarter’s effective tax rate of 32 percent includes the resultant year-to-date true up in tax expense and discrete items of $12 million, net. The effective tax rate for the prior-year quarter of 38 percent was negatively impacted by asset impairment charges and other items.
Oilseeds Earnings Strong on North and South American Performance
Oilseeds operating profit in the third quarter was $361 million, up $25 million from the same period one year earlier.
Crushing and origination operating profit was $242 million, down $14 million from the year-ago quarter. Despite tight crop supplies, ADM’s North America oilseed crushing operations had good capacity utilization amid good foreign and domestic protein meal demand. In South America, ADM exported large volumes at the peak of the inverse market, capturing strong margins. European crushing results declined due to limited soybean availability.
Refining, packaging, biodiesel and other generated a profit of $85 million for the quarter, up $57 million on improved biodiesel results and record profits from protein specialties.
Cocoa and other results continued to improve sequentially, though they decreased $24 million compared to the year-ago quarter.
Oilseeds results in Asia for the quarter were up $6 million from the same period last year, principally reflecting ADM’s share of the improved results from Wilmar International Limited.
Corn Processing Results Improved on Ethanol Margin Recovery
Corn processing operating profit of $159 million represented an increase of $91 million from the same period one year earlier. Corn hedge effects in the third quarter were a charge of $11 million, versus a charge of $31 million in the year-ago period.
Excluding the impact of corn hedge ineffectiveness, sweeteners and starches results declined by $26 million, with overall demand and margins remaining solid.
Excluding the impact of corn hedge ineffectiveness, bioproducts results increased $97 million to $71 million. Overall ethanol margins remained profitable though volatile.
Agricultural Services Impacted by Lower U.S. Volumes and Weaker International Merchandising Results
Agricultural Services operating profit was $102 million, up $24 million from the same period one year earlier. When adjusting for year-ago charges related to Gruma and intercompany insurance settlements in the current period of approximately $30 million, results for the segment declined $152 million from last year.
Merchandising and handling earnings declined $104 million to $4 million, as low U.S. crop supplies reduced export volumes and as results from international merchandising were weak.
Transportation results increased $2 million to $21 million on good northbound barge freight business.
Milling and other results remained solid as the milling business continued to perform well.