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Industry News & Trends / Business & Markets
on May 3, 2016

ADM quarterly profit down 53.3 percent to $230 million

Company cites market conditions for decline

Archer Daniels Midland Co. reported a first quarter profit decline of 53.3 percent, citing challenging market conditions.

ADM reported net income of $230 million for the quarter ended March 31, 2016, with operating profit at $573 million.

“Challenging market conditions continued in the first quarter, particularly affecting Ag Services,” said ADM Chairman and CEO Juan Luciano. “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.”

Key figures

  • Agricultural Services operating profit was $76 million, down $118 million from the year-ago quarter.
  • The milling and other category had a solid quarter, but results were down $7 million to $48 million due to lower grain and feed margins.
  • Corn Processing operating profit increased from $127 million to $129 million.
  • Bioproducts results were down from $42 million to a loss of $12 million, due primarily to the continued challenging conditions in the global lysine market. In addition, ethanol margins continue to be impacted by high industry production levels that caused inventories to build throughout the quarter.
  • Oilseeds operating profit of $261 million decreased $231 million from the strong year-ago results.
  • Crushing and origination operating profit of $120 million declined $214 million from last year’s high levels. Global soybean crush and origination results were down significantly due to lower global margins resulting from increased Argentine soy meal exports and significantly reduced U.S. meal exports. In addition, lower softseed crush volumes and weaker Brazilian commercialization, which slowed throughout the quarter, negatively impacted results.
  • Refining, packaging, biodiesel and other generated a profit of $79 million for the quarter, down $11 million from year-ago results, with stronger results from North America and Europe offset by weaker results in South America.

“The first half of the year continues to present a challenging environment,” Luciano said. “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.”

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