ADM announces plan to spin off 3 dry mill ethanol plants

By Erin Voegele | April 26, 2019

Archer Daniels Midland Co. has announced plans to create a new ethanol subsidiary that will include the company’s three dry mill ethanol plants, located in Columbus, Nebraska; Cedar Rapids, Iowa; and Peoria, Illinois.

ADM made the announcement as part of its first quarter 2019 earnings release on April 26.

During an earnings call, Juan Luciano, chairman and CEO of ADM, said the ethanol subsidiary will report as an independent segment once established. “The establishment of the new subsidiary will facilitate the separation of our three ethanol dry mills as we advance strategic alternatives, which may include, but are not limited to, a potential spinoff of the business to existing ADM shareholders,” he said. “Of course, as with any strategic decision, these changes to our portfolio will be subject to market conditions, acceptable valuations and the approval of our board.”

Regarding first quarter financial performance, ADM reported the company was impacted by severe weather and flooding. “The first quarter proved more challenging than initially expected,” Luciano said. “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.”

The company reported a $74 million loss for its bioproducts segment, which includes ethanol, down from a $3 million loss during the same period of 2018.

Overall, the company reported net earnings attributable to ADM of $233 million, down from $292 million during the first quarter of last year. Diluted earnings per common share were 41 cents, down from 70 cents during the same period of 2018.