Biofuels producer Archer Daniels Midland (ADM) has announced first quarter net earnings of $233 million (approximately €209 million) after extreme weather and flooding in the US Midwest negatively impacted earnings.
The company announced plans to spin off its ethanol business after disappointing biofuel margins and flooding in the Midwest caused ADM’s profits to drop 41%, from $393 million in Q1 2018, Reuters reported.
“The first quarter proved more challenging than initially expected,” said chairman and CEO Juan Luciano. “Impacts from severe weather in North America were on the high side of our initial estimates, and the ethanol industry environment limited margins and opportunities.
“Despite a challenging start to the year, we continue to make excellent progress on our key imperatives for 2019: improving performance in certain businesses, accelerating our Readiness efforts, and delivering results from our growth investments.”
In a commitment to delivering its objective of year-on-year comparable or improved full-year earnings, ADM announced a number of new measures to achieve long-term growth and shareholder value, including the creation of an ethanol subsidiary.
This subsidiary will include ADM’s dry mills in Columbus, Nebraska; Cedar Rapids, Iowa; and Peoria, Illinois. Operating as an independent segment, the new structure will allow ADM to ‘advance strategic alternatives, which may include, but are not limited to, a potential spin-off of the business to existing ADM shareholders’, the company noted.
ADM’s carbohydrate solutions segment, which includes ethanol, posted first quarter earnings of $96 million, down from $213 million in 2018. The company put this down to a ‘continued weak industry environment’, with production volumes impacted by severe weather.
Revenue fell to $15.3 billion, with earnings of $0.46 per share on an adjusted basis.