Archer Daniels Midland Company
) began 2014 with mixed first-quarter results. While the
company's bottom-line results marked a year-over-year
improvement, its revenues were hit hard by a severe winter during
The company's adjusted earnings for the quarter surged
approximately 19.6% to 55 cents per share from 46 cents posted in
the year-ago comparable quarter. The rise came primarily on the
back of strong margin improvement at Oilseeds and Corn processing
segments, partially offset by weak performance at the Agriculture
However, quarterly earnings fell short of the Zacks Consensus
Estimate of 76 cents per share. The lower-than-expected bottom
line result hit the investor sentiment. Consequently, the stock
declined nearly 2.6% during yesterday's trading session.
Further, including certain one-time items, Archer Daniels
reported earnings of 40 cents per share as compared with 41 cents
in the comparable year-ago quarter.
Archer Daniels' quarterly net sales fell nearly 4.7% year over
year to $20,696 million and lagged the Zacks Consensus Estimate
of $22,106 million.
Segment-wise, revenues at Archer Daniels' Oilseeds Processing
segment fell 4.2% to $7,803 million, Agricultural Services
segment's revenues declined 5.0% to $9,974 million and Corn
Processing's revenues decreased 7.3% to $2,830 million, all on a
year-over-year basis. However, the company's Other segment's
revenues increased nearly threefold to $89 million from $31
million in the prior-year quarter.
Q1 Operational Discussion
Archer Daniels reported adjusted segment operating profit of
$780 million, marking an improvement of 16.6% from the year-ago
quarter on the back of robust performances at the Oilseeds and
Corn processing segments. There were partly offset by weak
performance at the Agricultural Services segment.
On a segmental basis, the
segment recorded an operating profit of $358 million compared
with $308 million in the year-ago period. In North America, the
company witnessed strong utilization of soybean crushing due to
increased meal demand while in South America, good harvest,
strong demand and better logistics aided the soybean crushing and
segment registered a whopping $64 million increase in operating
profit to $261 million from the year-ago quarter. The increase
was primarily attributable to strong ethanol margins owing to the
robust international demand and lower industry production.
Operating profit for the
segment was flat year over year at $153 million as merchandising
and handling as well as milling and other businesses remained
weak during the quarter which was fully offset by strong recovery
in Transportation business.
segment posted operating profit of $8 million, down from $13
million reported in the prior-year quarter.
Archer Daniels, which competes with
), ended the quarter with $1,083 million in cash and cash
equivalents as compared with $1,448 million at the end of the
prior-year quarter. At quarter-end, long-term debt including
current maturities was $5,373 million, down $1,132 million from a
debt of $6,505 million at the end of first quarter 2013.
Shareholders' equity as of Mar 31, 2014 was $20,062 million.
During the reported quarter, the company deployed $188 million
toward capital expenditure as against $248 million in the first
quarter of 2013. Further, Archer Daniels' had a negative free
cash flow of $546 million as of Mar 31, 2014, compared with
positive $93 million as of Mar 31, 2013.
Moreover, the company returned $333 million to shareholders in
the form of share repurchase of worth $175 million and dividend
payments of $158 million during the quarter. In the fourth
quarter of the previous fiscal, Archer Daniels had laid out a
plan to buy back 18 million shares by the end of 2014, as part of
its balanced capital allocation strategy. According to this
strategy, the company intends to return about $1.4 billion to
shareholders in the form of dividends and share repurchases and
direct $1.4 billion into the business toward capital spending and
small M&As in 2014.
Other Stocks Worth Considering
Archer Daniels currently carries a Zacks Rank #3 (Hold).
However, some other better-ranked stocks that are worth a look in
the agricultural products industry include
The Andersons Inc.
). Both of these have a Zacks Rank #2 (Buy).
ARCHER DANIELS (ADM): Free Stock Analysis
ANDERSONS INC (ANDE): Free Stock Analysis
BUNGE LTD (BG): Free Stock Analysis Report
SYNGENTA AG-ADR (SYT): Free Stock Analysis
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