Senior ADM managers are optimistic following a robust Q4.
The Archer Daniels Midland Co. management team navigated challenging external conditions in 2019, but the business is optimistic about opportunities in 2020 and beyond following a good fourth quarter.
Net profits attributable to ADM were $1,379 million as of December 31, 2019, or $2.44 per share on common stock, a 24% decrease from $1,810 million, or $3.19 per share, in the same fiscal year. Earnings jumped 60% from $315 million, or 55c per share, in the same period last year to $504 million, or 90c per share, in the fourth quarter of fiscal 2019. In the fourth quarter, adjusted operating profit climbed from $860 million to $1,028 million.In a Jan. 30 conference call with analysts, President and CEO Juan Luciano stated,
“I’m proud to look back on a year in which we delivered significant advancements in each of our strategic pillars.” We made significant business advancements in our optimize pillar, and the Decatur, Illinois, maize complex and Golden Peanut and Tree Nuts business are reaping the rewards of our labor. We closed all of the less productive mills and opened our brand-new, cutting-edge facility in Mendota, Illinois, reshaping the wheat milling landscape in North America (Ill.).
We have finished the massive global organization reform, which includes lowering management levels to assist us increase productivity and efficiency and providing early retirement to some of our colleagues in North America. And only during the last quarter, weentered into an agreement to sell our palm plantation operations in Brazil and sold our investment in CIP, advancing our ongoing efforts to ensure our asset portfolio maximizes returns and aligns with our core competencies.”
From $64,341 million to $64,656 million, the year’s revenues climbed. In the fourth quarter of the 2019 fiscal year, revenues climbed by 2% to $16,329 million from $15,947 million.
Ag Services and Oilseeds segment operating profit decreased 4% to $1,935 million in the 2019 fiscal year, although profit increased 20% to $739 million in the fourth quarter. In the segment, operating profit for agricultural services decreased by 24% year over year to $502 million, while crushing profit decreased by 11% to $580 million and other and refined products climbed by 58% to $586 million.
The Carbohydrate Solutions segment’s operational profit decreased 32% year over year to $644 million in the 2019 fiscal year, while the fourth quarter saw a 12% decrease in profit to $174 million. Profit from starches and sweeteners decreased by 10% for the entire year but rose by 7% in the fourth quarter.
The executive vice president and chief financial officer, Ray G. Young, stated that the wheat milling results were better than expected worldwide. “Bioproducts results were lower than fourth-quarter results from previous year because of persistently unfavorable ethanol conditions and some losses from risk management hedging.”
According to Mr. Young, ADM will start disclosing information on its Carbohydrate Solutions division in two subcategories: Vantage Corn Processors, or VCP, and Starches and Sweeteners. According to Mr. Young, VCP is a recently established dry mill ethanol subsidiary that will also sell ethanol made at ADM’s wet mills. He said that the outcomes of all of ADM’s wet mill activities, including the manufacturing of ethanol, will be included in the Starches and Sweeteners subsegment.
Operating profit in the Nutrition division rose to $418 million in the 2019 fiscal year from $339 million in the previous year.2018 saw a $102 million increase in fourth-quarter profit above the $62 million recorded during the same period previous year. WFSI profit climbed to $83 million from $59 million in the fourth quarter and to $376 million from $318 million for the entire year within the segment.
Mr. Young stated that the business anticipates the growth narrative to continue in 2020, characterizing 2019 as an outstanding year of growth for ADM’s Nutrition sector.
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“With growth in operating profit at around 20%, we anticipate overall Nutrition segment results for the first quarter to be substantially higher than the first quarter of 2019,” he stated. “WFSI ought to be aware of the ongoing demand from clients for our cutting-edge ingredients as well as our unmatched knowledge and support.
The field of animal nutrition will continue tobenefit from our acquisition of Neovia and the implementation of the identified synergies, even though we anticipate further challenges in the global lysine pricing environment during the quarter. Furthermore, the first quarter Neovia purchase price adjustment on inventory costs from the previous year, which had a single negative effect on results, will help year-over-year comparisons.