Archer Daniels Midland Earnings: Increased Costs Strains Margins as Profit Drops

S&P 500 (NYSE:SPY) component Archer Daniels Midland Co. (NYSE:ADM) reported its results for the first quarter. Archer Daniels Midland processes feedstuffs including oilseeds, cocoa, corn, and wheat. The company also manufactures vegetable oil and protein meal, corn sweeteners, flour, ethanol, biodiesel, and other food and feed ingredients.

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Archer Daniels Midland Co. Earnings Cheat Sheet

Results: Net income for Archer Daniels Midland Co. fell to $182 million (28 cents per share) vs. $460 million (68 cents per share) a year earlier. This is a decline of 60.4% from the year-earlier quarter.

Revenue: Fell 0.4% to $21.81 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Archer Daniels Midland Co. reported adjusted net income of 50 cents per share. By that measure, the company beat the mean estimate of 44 cents per share. Analysts were expecting revenue of $21.38 billion.

Quoting Management: “Our first-quarter segment results were mixed,” said ADM Chairman and CEO Patricia Woertz. “Oilseeds performance was strong, the ethanol industry experienced sustained negative margins, and Agricultural Services managed well through a complicated quarter, challenged by the drought.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the fourth quarter of the last fiscal year, net income fell 25.5% while the figure fell 31% in the third quarter of the last fiscal year and 89.1% in the second quarter of the last fiscal year.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with net income of 38 cents versus a mean estimate of net income of 62 cents per share.

Revenue has fallen in the past two quarters. In the fourth quarter of the last fiscal year, revenue declined 0.9% to $22.68 billion from the year-earlier quarter.

Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 61 cents per share to 54 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. For the fiscal year, the average estimate has been unchanged at $3.23 a share.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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