Archer Daniels Midland Company
) posted adjusted earnings of 46 cents per share for
third-quarter 2013, missing the Zacks Consensus Estimate by 2
cents and dropping 13.2% from the year-ago comparable quarter's
adjusted earnings of 53 cents. The miss resulted from a decline
in operating profit at the Agricultural Services segment.
ARCHER DANIELS (ADM): Free Stock Analysis
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On a reported basis, the company posted earnings of 72 cents per
share, substantially above 28 cents earned in the prior-year
Archer Daniels' quarterly net sales dropped nearly 2% year over
year to $21,393 million, but surpassed the Zacks Consensus
Estimate of $20,282 million. The year-over-year decline in sales
was mainly due to lower volumes resulting from tight U.S. crop
supplies. Overall, the company's results remained strong during
the quarter, nearly nullifying the impact of the 2012 U.S.
Segment-wise, the company's Corn Processing revenues jumped 8.5%
to $3,393 million on account of improved ethanol margins, offset
by lower processing volumes. Archer Daniels' Oilseeds Processing
segment revenues decreased 4.9% year over year to $9,216 million
due to lower oilseeds processing volumes. Moreover, revenues for
the Agricultural Services segment witnessed a decline of 2.3% to
Archer Daniels reported total segment operating profit of $606
million, an improvement of 21.7% from the year-ago quarter,
driven by robust performance at all the company's segments.
On a segmental basis, the
segment recorded an operating profit of $361 million compared
with $336 million in the year-ago period. The $25 million
improvement was due to strong performance in both North and South
America regions. North American oilseed crushing operations
benefited from superior capacity utilization along with excellent
foreign and domestic protein meal demand, while South American
operations gained from strong margins that resulted from large
Operating profit for
segment rose 30.8% to $102 million driven by a smooth transition
to new crop. However, adjusting for the year-ago Gruma related
charges and the current period intercompany insurance
settlements, operating profit declined $152 million year over
year. During the quarter, merchandising and handling remained
weak on account of poor U.S. origination and export volumes and
reduced international merchandize margins, while transportation
and milling businesses continued to do well.
segment's operating profit registered growth of a whopping 133.8%
to $159 million from $68 million in the year-ago quarter. This
was primarily attributable to improved results from ethanol.
segment posted operating loss of $16 million, compared with
operating profit of $16 million reported in the prior-year
Archer Daniels ended the quarter with $3,252 million in cash and
cash equivalents compared with $1,235 million at the end of the
prior-year quarter. At quarter-end, long-term debt including
current maturities was $6,520 million, down $295 million from a
debt of $6,815 million at the end of the third quarter of 2012.
Further, the company continued to reduce its net debt, which
reached $3.4 billion from $8.8 billion in the year-ago period.
Shareholders' equity as of Sep 30, 2013 was $19,566 million.
GrainCorp Acquisition Update
Archer Daniels continues to progress well with its proposed deal
to acquire leading agribusiness company, GrainCorp Limited.
The company has so far received clearance on the deal from 7 out
of 9 jurisdictions. During the third quarter, the company's
acquisition proposal received a nod from South Africa, Japan, the
European Commission and South Korea.
The company is now working with government agencies in Australia
and China to gain approval. The company expects to close the deal
in the first quarter of 2014, based on a recent order by the
Australian Treasurer committing the government to give out a
decision earliest by Dec 17.
Archer Daniels has agreed to pay A$12.20 per share for all
outstanding shares of GrainCorp, which totals approximately A$3.4
billion. The American agribusiness giant already holds 19.8%
stake in the Australian agri-products dealer, acquired for an
average of A$11.24 per share.
Other Stocks Worth Considering
Archer Daniels currently carries a Zacks Rank #3 (Hold). Other
stocks performing well in the agricultural products industry
Gruma S.A.B. de CV
The Andersons Inc.
). Of these, Gruma and Limoneira carry a Zacks Rank #1 (Strong
Buy), while Andersons has a Zacks Rank #2 (Buy).