ADM expects lift from Trump reforms, downplays trade concern

Source: By Karl Plume, Reuters • Posted: Wednesday, February 8, 2017

U.S. agricultural trader Archer Daniels Midland Co (ADM.N) said on Tuesday it expects to benefit from several major policy changes proposed by President Donald Trump and believes it can adjust to any potential disruptions to trade with key partners such as Mexico.

ADM sees “undeniable positives” in proposals from U.S. tax policy reform and lower corporate taxes to deregulation and investments in infrastructure, the company said after reporting a drop in quarterly profit on Tuesday.

“We are cautiously optimistic given their priorities that the government has delineated in the early days,” Chief Executive Officer Juan Luciano said during a conference call with analysts. “If they do what they say … it will significantly benefit ADM and our shareholders, probably the economy as a whole in that sense.”

The Chicago-based agribusiness downplayed concerns that a trade war could erupt over the administration’s threats to tax imports and build a border wall with Mexico and stressed that ADM’s global supply chain could weather any trade disruptions.

ADM is among dozens companies and industry groups that have reached out to the White House about proposals to tear up or renegotiate trade agreements such as NAFTA that have helped boost U.S. agricultural exports.

“We think that we are going to talk with our partners in Mexico and we are probably going to modernize NAFTA. But even if the worst came to happen, we think that we still have a very positive 2017 ahead of us,” Luciano said.

ADM reported net fourth quarter earnings of $424 million, or 73 cents per share, down 41 percent from $718 million, or $1.19 per share, in the same period a year earlier. Excluding items, ADM earned 75 cents per share, missing the consensus estimate of 77 cents a share, according to Thomson Reuters I/B/E/S.

A record-large U.S. corn and soybean harvest and brisk U.S. crop exports boosted results for its agricultural services segment. But those gains were blunted by more losses by its global trading desk, which has exited energy trading and shed key personnel in recent months.

ADM said it has turned down bids for its corn ethanol dry mills after offering the assets up for possible sale or other transaction last year, but remains in talks with bidders. Potential tax reforms proposed by the Republican-led government could also broaden ADM’s options in any deal in the future, Chief Financial Officer Ray Young said.

ADM shares were up 1.6 percent on Tuesday at $44.74.

(Additional reporting by Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila, Paul Simao and Bernard Orr)