Total revenue for the quarter was about $14.98bn, compared to $14.38bn for Q1 2016, reported ADM.
Net earnings came in at $339m, up from $230m in the same period a year prior, it added.
The results, year-over-year, improved for all business segments, said Juan Luciano, CEO of ADM. He said the company is continuing with its strategic plan in terms of expansion of its animal nutrition services, new investment and facility consolidation and streamlining in specific areas.
“Our operational excellence initiatives have delivered significant savings and efficiencies, and we continue to grow strategically by expanding into new geographies and increasing our capabilities in food, beverages and feed,” he said on a call with analysts. “Those actions contributed to the improved results we saw in the first quarter despite still muted margin environment in some businesses and the continued momentum in the execution of our plan gives us confidence that we will deliver sustainable value creation.”
Segment results
In agricultural services, the adjusted first quarter operating profit was $88m, up from $76m in 2016, said the company.
“In North America, demand for grain exports remains strong and the business benefited from good execution volumes and improvements in grain carries,” said the CEO. “The improved results in North American grain operations were offset by lower results in international merchandising.”
International merchandising was down from the year-ago quarter, with ADM citing a lack of opportunities and some "unfavorable mark-to-market effects."
The milling division saw a drop in sales volume and product margins, he said. The sale of ADM's crop risk services business to Validus Holdings was completed earlier this week.
The corn business saw adjusted operating profit of $177m, an improvement from $129m in 2016, said ADM.
The segment is seeing strong demand for sweeteners and starches and bio-products, said Luciano. However, there was about $10m in unexpected repairs to a water pipe at a complex in Decatur.
“Our lysine business has better margins versus the year ago period, thanks to better pricing and improvements in production cost,” he said. “Lysine improvements helped animal nutrition overall achieve a better quarter despite warmer weather that limited sales volumes.”
The oilseed segment also had improved earnings, with solid results from global soft seeds and investment in Wilmar, he said.
It saw adjusted operating profit of $314m, an improvement from the $261m recorded in 2016, said the company.
Crushing and origination results tended to be flat, said Luciano. There was global demand for protein meal, but soybean crush margins were pressured by alternative protein meals, added the CEO.
“We expect feed wheat supplies to largely clear the market by the end of the second quarter and demand for soybean meal to increase in Europe,” he said.
Future growth and development
Work is continuing on the company’s strategic plan, said Luciano.
Looking forward, the company is anticipating a better second quarter for ag services, than what was seen last year stemming from better grain caries improvements in global merchandising and improved results from Argentina, he said. With the understanding that global demand will be strong throughout the year, the expectation is that the sector will outperform 2016 results, though not meet the initial expectations for improvement.
“We’ll be watching how the large South American crops impact North American exports’ competitiveness,” he said. “Absent any major dislocation event, we expect it will be a very competitive global environment.”
The corn segment also is expected to improve in the second quarter, compared to results from last year, said Luciano.
The oilseed sector however is anticipated to have flat or reduced results in the second quarter compared to the second quarter last year, he said. “Soybean crush margins in the second quarter will continue to be challenged in some geographies due to ample global soybean supplies and a competitive protein meal environment,” he added.