CHICAGO, ILLINOIS, U.S. — Archer Daniels Midland Company (ADM) reported on Feb. 2 that earnings for the year were $1.84 billion or $2.98 per share, down from $2.24 billion or $3.43 per share in the same period of last year.
“Adverse market conditions that impacted many of our businesses earlier in the year continued through the fourth quarter,” said Juan Luciano, ADM chairman and chief executive officer (CEO). “Despite the challenging conditions, we achieved 2015 adjusted ROIC of 7.3%, 70 basis points above our annual cost of capital, generating positive EVA.”
Net earnings for the fourth quarter were $718 million, or $1.19 per share, up from $701 million or $1.08 per share in the same period of last year. Adjusted segment operating profit was $599 million, down 47% from $1.12 billion a year earlier.
Global dynamics reduced margins across the U.S. agricultural export sector, the U.S. ethanol industry and in the soybean crushing industry worldwide, ADM said.
Agricultural Services adjusted operating profit was $214 million, down $207 million from the very strong year-ago period when ADM exported and handled record grain volumes in 2014.
Merchandising and handling earnings declined $163 million to $100 million.
Despite a large 2015 U.S. crop, low commodity prices limited grain movements, resulting in fewer merchandising opportunities. In addition, a strong U.S. dollar, along with ample global crop supplies limited U.S. export volumes and margins.
These declines were partially offset by improved performance by ADM's Global Trade Desk, the company said.
Transportation results declined $39 million to $53 million, as lower U.S. exports reduced barge freight rates and volumes. Milling and other had another strong quarter, down slightly to $61 million.
Corn Processing adjusted operating profit decreased from $281 million to $126 million. Sweeteners and starches results improved $48 million to $102 million as the business continued to perform well, with lower input costs and good demand.
Bioproducts results declined from $227 million to $24 million as steep declines in crude oil prices drove lower ethanol prices. This, combined with continued high industry production levels, progressively reduced industry margins through the quarter.
In addition, lysine operating profits were challenged by excess global supply resulting in declines in pricing and margins – and some production outages in ADM’s plant.
“In the fourth quarter, we advanced our strategic plan by expanding our international corn processing footprint with the acquisition of Eaststarch, progressing our destination marketing strategy with the announcement of the Medsofts Egyptian joint venture, and strengthening our European Olenex refined oils joint venture,” Luciano said.
Oilseeds adjusted operating profit of $195 million decreased $164 million from the strong year-ago results. Crushing and origination operating profit declined $120 million from last year's high levels to $86 million. Global soybean crush margins decreased throughout the quarter, driven by anticipation of more competitive Argentine soybean meal entering well-supplied world markets.
In addition, ample global meal supplies, in combination with the strong U.S. dollar, further negatively impacted U.S. meal exports and margins. Brazilian origination results were lower as grain was commercialized earlier in the year compared to the prior year. Softseed margins remained under pressure due to lower prices.
Refining, packaging, biodiesel and other generated a profit of $57 million for the quarter, down $6 million from year-ago results as declining crude oil prices and weaker global demand pressured global biodiesel margins.
Oilseeds results in Asia for the quarter declined $13 million from the year-ago period due primarily to non-operating charges included in Wilmar's quarter three results.
In the fourth quarter, WFSI operating profit was $47 million. Positive contributions from WILD Flavors, SCI and Eatem Foods offset declines in some of the other specialty ingredients businesses, which were impacted by various factors including weaker sales overseas.
“With current headwinds likely to persist, we remain focused on the areas within our control. We will continue to implement our pipeline of operational excellence initiatives, with an objective of an incremental $275 million of run-rate savings by the end of the calendar year. As part of the evolution of our strategic plan, we are taking a fresh look at the capital intensity of our operations and portfolio, seeking innovative ways to lighten-up and redeploy capital in our efforts to drive long-term returns,” Luciano said.