USA – Archer Daniels Midland (ADM) Company has reported a 40% decline in net earnings in the first quarter impacted by severe weather conditions in North America.
The company began a series of accelerated business initiatives including organisational changes to centralize and standardize business activities and processes and enhance productivity and effectiveness.
For the quarter period, revenues stood at US$15.3 billion, down 1.4% while net earnings fell from US$393 million in the opening three months of 2018 to US$233 million.
The company reported earnings per share of $0.41 including a $0.02 per share gain on the sale of certain assets and a step-up gain on an equity investment.
ADM said it remains optimistic for the second half with the advancement of its strategy as it anticipates resolution of U.S.-China trade situation and an expected acceleration of soybean meal demand driven by African Swine Fever.
“The first quarter proved more challenging than initially expected,” said Chairman and CEO Juan Luciano.
“Impacts from severe weather in North America were on the high side of our initial estimates, and the ethanol industry environment limited margins and opportunities.
“Despite a challenging start to the year, we continue to make excellent progress on our key imperatives for 2019: improving performance in certain businesses, accelerating our Readiness efforts, and delivering results from our growth investments.
“We are very encouraged with our new Neovia business and the creation of a global Animal Nutrition platform.”
In Origination, North America delivered solid margins offset by severe weather dents: high water conditions, which limited grain movement and sales.
Oilseeds results were comparable to the year-ago period, having benefited from Biodiesel Tax Credit and higher executed crush margins around the globe offset by slow farmer selling and lower Chinese demand.
Carbohydrate Solutions were negatively impacted by severe weather in North America, higher manufacturing costs at the Decatur complex, and weaker margins in flour milling.
Nutrition results including Animal Nutrition were lower, compared to last quarter which benefited from temporary industry effects on vitamin additives.
WILD Flavors & Specialty Commodities Inc (WFSI) recorded 21% growth in profit, led by Wild Flavors which posted a strong performance.
To enhance long-term value creation, ADM has announced several new measures: it plans to repurpose its corn wet mill in Marshall, Minnesota to produce higher volumes of food and industrial-grade starches, as well as liquid feedstocks, for food and industrial uses.
The company will phase out production of high-fructose corn syrup at the facility as soon as committed deliveries are complete.
It will also establish an entirely new ethanol subsidiary, which will report as an individual segment and allow ADM to advance strategic alternatives.
The subsidiary will include the dry mills at Columbus, Nebraska; Cedar Rapids, Iowa; and Peoria, Illinois.
ADM said it is offering early retirement for some colleagues in the U.S. and Canada as part of the business realignment plan.
ADM also plans to reduce 2019 capital spending by 10%, to the range of $0.8 to $0.9 billion.