ADM: Current blending economics for ethanol favorable

By Erin Voegele | May 01, 2018

On May 1, Archer Daniels Midland Co. released first quarter 2018 financial results, reporting that earnings for the company’s bioproducts segment were down when compared to the same period of last year “in a pressured ethanol industry margin environment.”

The bioproducts segment reported a $3 million loss for the first quarter, compared to $10 million in profit reported for the first quarter of 2017.

During an investor call, Juan Luciano, chairman and CEO of ADM, said ethanol margins are expected to remain weak through the second quarter. As a results, earnings for the bioproducts segment that are expected to be lower than last year.

While ethanol margins are weak, Luciano also said that ADM is seeing favorable blending economics for ethanol both domestically and globally, which should lead to strong exports. The company currently expects 1.6 billion gallons of U.S. ethanol to be exported this year, down from previous estimates of 1.8 billion gallons. The reduction in expected export volumes is due to recently implemented duties in China.

Overall, ADM reported earnings per share of 70 cents for the first quarter of this year, up from 59 cents per share for the same period of last year. Adjusted earnings per share reached 68 cents per share, up from 60 cents per share during the first quarter of 2017.

Segment operating profit reached $704 million, up from $676 million during the same period of last year. Adjusted segment operating profit was $717 million for the first quarter, up from $678 million during the first quarter of last year.