Archer Daniels Down 9% In 3 Months: Can Efforts Aid Recovery?
Zacks Investment Research | Feb 17, 2019 09:11PM ET
Archer Daniels Midland Company (NYSE:ADM) has been witnessing softness across its Carbohydrate Solutions segment for the past few quarters now. This is weighing on the company’s top line, having lagged estimates in eight of the last 10 quarters including fourth-quarter 2018.
Additionally, the company has reported soft fourth-quarter results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Also, it witnessed a negative earnings surprise after four straight beats, with second consecutive sales miss. Revenues fell year over year due to decline in revenues at all its segments, except the Oilseeds and Nutrition. Lower Merchandising and Handling results, including important insurance settlements in other income and dismal performance at Animal Nutrition, on account of persistent production issues were added deterrents. Furthermore, the adjusted operating profit at the company’s Origination, Nutrition and Carbohydrate Solutions segments decreased 29.9%, 15.1% and 30.9%, respectively.
Lower Bioproducts results along with weak ethanol margins and volumes have been hurting the Carbohydrate Solutions division’s performance. In addition, lower margins and sales in EMEA as well as elevated costs in North American liquid sweeteners due to lower production rates at Decatur complex remain deterrents. Going ahead, management expects the segment’s overall results to decline year over year due to persistent pressure on European sweetener and North American ethanol industry margins as well as issues related to the Decatur plant. However, these headwinds will be somewhat offset by robust Starches and Sweeteners in North America.
Consequently, shares of the company have lost 9.3% in the past three months, wider than the Original post
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