ADM sees revenue drop in fourth quarter results

03-Feb-2016 - Last updated on 03-Feb-2016 at 21:20 GMT

Archer Daniels Midland (ADM) saw a dip in revenue and gross profit stemming from lower returns across US agricultural exports, the ethanol business and soy crushing globally.

The Chicago-based company reported on Tuesday the results for its fourth quarter ending December 31 with comparisons to the same period in 2014.

The overall revenues for the quarter declined from about $20.9bn in 2014 to about $16.4bn at the end of 2015, said company officials. The year ending December 31 saw a revenue decrease from $81.2bn to $67.7bn.

The adjusted segment operating profit was $599m from about $1.1bn, they said.

Gross profit for the quarter dropped from about $1.5bn to $865m for the quarter. However, net earnings that can be attributable to ADM rose from $701m to $718m in 2015, reported ADM.

Adjusted earnings per share fell from $1 in 2014 to $0.61 for the end of the quarter in 2015, they said.

“Global dynamics reduced margins across the US agricultural export sector, the US ethanol industry, and in the soybean crushing industry worldwide,” said Juan Lucian, chairman, president and CEO on a conference call. “Adverse market conditions that impacted many of our businesses earlier in the year continued through the fourth quarter.

Agricultural services

Multiple areas within the agricultural services area were down, said company officials. The operating profit was $214m, dropping $207m from the same period a year before. However, the previous year marked a record handling and exporting of grain volume.

There was a $163m decline in the earnings for merchandising and handling, they said, although, the performance of ADM’s Global Trade Desk partially offset the declines. Milling also was down slightly.

“Despite a large 2015 US crop, low commodity prices limited grain movements, resulting in fewer merchandising opportunities,” they said. “In addition, a strong US dollar, along with ample global crop supplies limited US export volumes and margins.”

Transportation results also declined ending at $53m, said officials. Reduced exports led to lower barge freight rates and amounts.

Corn and oilseeds

Operating profit for corn processing dropped to $126m from $281m, said officials. Bio-products declined from $227m to $24m based on drops in crude oil prices, and operating profits for lysine also saw challenges.

But, the sweeteners and starches area saw improvement with a rise to $102m, they said.

The operating profit for oilseeds declined, reported ADM, as did the refinement and biodiesel areas. In Asia, oilseed results also declined from the same period a year ago.

“Crushing and origination operating profit declined $120 million from last year's high levels to $86 million,” said officials. “Global soybean crush margins decreased throughout the quarter driven by anticipation of more competitive Argentine soybean meal entering well-supplied world markets. In addition, ample global meal supplies, in combination with the strong US dollar, further negatively impacted US meal exports and margins.”

Other areas

The sale of ADM’s cocoa business also resulted in lower results, said executives.

The company’s Wild Flavors and Specialty Ingredients sector had an operating profit of $47m, an increase from the same quarter the year before, they said. “Positive contributions from WILD Flavors, SCI and Eatem Foods offset declines in some of the other specialty ingredients businesses, which were impacted by various factors including weaker sales overseas,” they added.