“In the second quarter, the ADM team continued to execute very well and delivered strong results. We capitalized on robust ethanol demand, a recovery of U.S. grain export volumes and continuing strong demand for oilseeds products,” said ADM Chairman and CEO Patricia Woertz.
“The team also continues to drive improved returns, with this quarter’s ROIC showing a 200-basis-point improvement over last year.
“Today, the crops in North America and Europe are developing nicely, so we are preparing for what could be very large harvests.”
Oilseeds operating profit of $328 million represented an increase of $18 million from the same period one year earlier. These numbers exclude a negligible charge for cocoa hedge timing effects, versus a gain of $11 million, or $0.01 per share, in the year-ago period.
Crushing and origination operating profit declined $22 million to $163 million. North and South American soybean crushing operations and North American canola crushing operations all saw good volumes and margins. Those were offset by lower results from South American origination amid slower farmer selling.
Refining, packaging, biodiesel and other generated a profit of $119 million for the quarter, up $26 million with good volumes and margins for refined and packaged oils in South America and record results for lecithin and protein specialties.
Cocoa and other earned $20 million in the quarter, up $37 million from the year-ago period, reflecting the improved margin environment in the cocoa business.
Oilseeds results in Asia for the quarter were down $23 million from the same period last year, principally reflecting lower results from Wilmar International Limited.
Corn processing operating profit of $277 million represented an increase of $69 million from the same period one year earlier. These numbers exclude positive timing effects of $70 million, or $0.07 per share, versus $15 million, or $0.01 per share, in the year-ago period.
Sweeteners and starches results increased $25 million to $136 million on steady volumes, with lower average selling prices offset by lower net corn costs.
Bioproducts results increased $44 million to $141 million driven by strong demand and good margins in ethanol.
Agricultural Services operating profit was $203 million, up $122 million from the year-ago period.
Merchandising and handling earnings increased $101 million to $115 million, amid strong U.S. export volumes, partial recovery of a loss reserve, and continued improvement in international merchandising results.
Transportation results increased $24 million to $27 million with southbound barge freight utilization driven by strong U.S. exports, and with good northbound utilization.
Milling and other results were essentially flat as lower milling results were offset by strong performance by the edible bean business.
This quarter’s effective tax rate was 28 percent, versus 29 percent in the same period last year.
As additional information to help clarify underlying business performance, the tables on page 9 include both adjusted EPS as well as adjusted EPS excluding significant timing effects.
ADM will host a conference call and audio webcast on Aug. 5, 2014, at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call.
Total Agricultural Services
Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items and timing effects (see items denoted*). Timing effects relate to hedge ineffectiveness and mark-to-market hedge timing effects. Management believes that segment operating profit and adjusted segment operating profit are useful measures of ADM’s performance because they provide investors information about ADM’s business unit performance excluding corporate overhead costs as well as specified items and timing effects. Segment operating profit and adjusted segment operating profit are non-GAAP financial measures and are not intended to replace earnings before income tax, the most directly comparable GAAP financial measure. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not be considered alternatives to income before income taxes or any other measure of consolidated operating results under U.S. GAAP.
(a) Current period gain includes individually insignificant disposals in Oilseeds (Q2 $0, YTD $15 million), Ag Services (Q2 $13 million, YTD $20 million), Corporate (Q2 and YTD $1 million) and a loss in Corn (Q2 $1 million, YTD $2 million). Prior period gain includes individually insignificant disposals in Oilseeds (Q2 $6 million, YTD $8 million), Corn (Q2 and YTD $3 million), Ag Services (Q2 $3 million, YTD $6 million), Other (Q2 and YTD $6 million) and a loss in Corporate (Q2 and YTD $2 million).
(a) Current assets (excluding cash and cash equivalents and short-term marketable securities) less current liabilities (excluding short-term debt and current maturities of long-term debt).
Total Financing Activities
Adjusted EPS and adjusted EPS excluding timing effects reflect ADM’s fully diluted EPS after removal of the effect on Reported EPS of certain specified items and timing effects as more fully described above. Management believes that these are useful measures of ADM’s performance because they provide investors additional information about ADM’s operations allowing better evaluation of ongoing business performance. These non-GAAP financial measures are not intended to replace or be an alternative to Reported EPS, the most directly comparable GAAP financial measure, or any other measures of operating results under GAAP. Earnings amounts in the tables above have been divided by the company’s diluted shares outstanding for each respective quarter in order to arrive at an adjusted EPS amount for each specified item and timing effect.