ADM reports improved ethanol performance in quarterly results

By Erin Voegele | February 04, 2014

Archer Daniels Midland Co. has released its financial results for the fourth quarter of 2013, reporting adjusted earnings per share of 95 cents, up from 60 cents in the same period of 2012. The company reported improved profits for its corn business, which was supported by improved ethanol margins.   

“The team delivered a strong finish to the year,” said ADM Chairman and CEO Patricia Woertz. “Lower corn costs and improved ethanol margins helped support a significant improvement in our corn business. Our great oilseeds performance was driven by our ability to meet robust global demand for meal and by improved biodiesel results in North America and Europe. However, our ag services business was impacted by the slow farmer-selling of corn and challenges in international merchandising.”

ADM reported a corn processing operating profit of $315 million for the quarter, up $296 million from the fourth quarter of 2012. The fourth quarter 2013 profit excludes specific items, including an impairment related to ADM’s Brazilian sugar mill. The company also indicated that corn hedge timing effects were a positive impact of $25 million, versus a negative impact of $16 million during the same quarter of 2012.

Results in the bioproducts segment increased by $228 million, reaching $134 million for the fourth quarter. ADM noted that strong domestic and international demand for ethanol resulted in significantly improved margins. The company’s sweeteners and starches results also increased, reaching $181 million due to net corn cost improvements and overall demand remaining seasonally solid.

ADM’s oilseed segment reported an operating profit of $478 million for the quarter, an increase of $67 million over the same period of 2012. Crushing and origination operating profit was $252 million while refining packaging, biodiesel and other generated a profit of $168 million, up from $118 million. The increase is attributed in part to improved biodiesel results in North America and Europe.

During a call to discuss the results, Juan Ricardo Luciano, chief operating officer and executive vice president of ADM, said lower corn costs, higher U.S. gasoline demand and strong exports supported lower industry inventories and higher margins for ethanol. He also indicated the company is continuing to actively manage ethanol production levels to maximize margins and is continuing to advance its cost-management efforts.

According to Luciano, ADM’s corn team drove improvements in the company’s ethanol business last year. This includes the implementation of cost-management projects, the reduction of inventories and enhanced risk management.

Luciano also addressed the U.S. EPA’s proposal to reduce the 2014 renewable fuel standard (RFS) volume requirements. “We will be disappointed if the government stepped back from their support of the program,” he said, noting that strong ethanol blending economics should drive the continued expansion of E15 and E85.