Archer Daniels Midland earnings rise 39%
US agricultural merchant Archer Daniels Midland has reported a 39 per cent increase in underlying second quarter earnings and flagged an improved performance from its troubled global trading desk. In the three months to June, the Chicago-based company reported adjusted earnings per share of $0.57 cents a share, up from $0.41 a year earlier, on revenues of almost $15bn. Analysts’ consensus was for adjusted earnings of $0.52 cents a share.
Including one off items and charges, earnings were $0.48 cents, unchanged on the same period a year ago. Net income attributable to ADM was $276m, down from $284m in 2016. “We are aggressively managing costs and capital, and taking additional portfolio actions; and we are ahead of pace to meet our 2017 target of $225m in run-rate savings,” said ADM chairman and chief executive Juan Luciano.
“With these collective actions, we expect to deliver solid year-over-year earnings growth and returns in 2017, and we are poised to be an even stronger company in 2018.” Archer Daniels Midland is the A in the group of four leading agricultural trading firms knows as the ABCDs, which also includes Bunge, Cargill, and Louis Dreyfus. Like its peers it has struggled to make money from its core business of buying and selling grains and oilseeds. A succession of bumper harvests has depressed prices and volatility, reducing trading opportunities.
ADM said agricultural services – its biggest division by revenue – had delivered a fourth consecutive quarter of year-on-year increases in operating profits, thanks to a strong performance from its North American grain handling business. But its global trade desk, which has suffered a profit squeeze because of the tough market conditions, also generated “solid results” ADM said, citing improved margins, favourable timing effects and actions to improve performance.
ADM have moved to overhaul the management of the unit, which is based in a small town outside Geneva, in an effort to drive a recovery in earnings. The division was established in 2015 to oversee ADM’s international supply network. “We continued to deliver on our strategic plan and capitalize on improving conditions in some markets to achieve strong 39 percent year-over-year earnings growth,” said Mr Luciano.