Archer Daniels Midland Reports First Quarter Results
Archer Daniels Midland Reports First Quarter Results
11/6/2007
Archer Daniels Midland (NYSE: ADM)
► Net earnings for the quarter ended September 30, 2007 increased $ 38 million to $ 441 million - $ .68 per share from $ 403 million - $ .61 per share last year.
“ADM delivered record first quarter earnings,” said Chairman and CEO Patricia A. Woertz. “These exceptional results demonstrate the strength of ADM’s diversified asset and product portfolio. Where excellent first quarter earnings of a year ago reflected steep growth in the ethanol market, our record first quarter earnings this year demonstrate our strengths in sweeteners & starches, oilseed processing and our global capabilities in grain merchandising and handling. With our unique business model, spanning diverse markets, we are capturing value from changing market conditions.”
► Segment operating profit for the quarter increased 23% to $ 797 million from $ 648 million last year.
- Oilseeds Processing operating profit increased on improved margin conditions, due to strong global protein and oil demand.
- Corn Processing operating profit declined due to lower ethanol sales prices and volumes and higher net corn costs. Last year’s Bioproducts results reflect the positive impact on ethanol volumes and prices of the phase out of MTBE.
- Agricultural Services operating profit increased due to improved global grain merchandising and handling results.
- Other operating profit increased primarily due to improved Financial private equity fund investment results.
► Financial Highlights
(Amounts in millions, except per
share data and percentages)
| THREE MONTHS ENDED | ||||||||
| 9/30/2007 | 9/30/2006 | % CHANGE | ||||||
| Net sales and other operating income | $ | 12,828 | $ | 9,447 | 36% | |||
| Segment operating profit | $ | 797 | $ | 648 | 23% | |||
| Net earnings | $ | 441 | $ | 403 | 9% | |||
| Earnings per share | $ | .68 | $ | .61 | 11% | |||
| Average number of shares outstanding | 647 | 661 | (2)% | |||||
Discussion of Operations
Net sales and other operating income increased 36 % to $ 12.8 billion. Increased selling prices resulting from sharp rises in commodity prices accounted for approximately 75 % of the increase while higher sales volumes, principally vegetable oil and wheat, accounted for the remaining 25 % increase.
A summary of first quarter operating profit and net earnings is as follows:
| First Quarter | ||||||||||||
| FY 2008 | FY 2007 | Inc (Dec) | ||||||||||
| Oilseeds Processing | $ | 209 | $ | 170 | $ | 39 | ||||||
| Corn Processing | 253 | 289 | (36 | ) | ||||||||
| Agricultural Services | 229 | 115 | 114 | |||||||||
| Other | 106 | 74 | 32 | |||||||||
| Segment operating profit | 797 | 648 | 149 | |||||||||
| Corporate | (150 | ) | (72 | ) | (78 | ) | ||||||
| Earnings before income taxes | 647 | 576 | 71 | |||||||||
| Income taxes | (206 | ) | (173 | ) | (33 | ) | ||||||
| Net earnings | $ | 441 | $ | 403 | $ | 38 | ||||||
Net earnings increased $ 38 million due principally to a $ 149 million increase in segment operating profits partially offset by increased corporate charges related principally to LIFO inventory valuations and costs associated with the realignment of our organizational structure. In addition, income taxes increased due primarily to the increased pretax earnings and to a higher effective tax rate resulting from changes in the geographic mix of earnings.
Oilseeds Processing
Operating profits consist of earnings
from:
| First Quarter | ||||||||||
| FY 2008 | FY 2007 | Inc (Dec) | ||||||||
| Crushing and origination | $ | 131 | $ | 104 | $ | 27 | ||||
| Refining, packaging, biodiesel, and other | 62 | 49 | 13 | |||||||
| Asian joint ventures | 16 | 17 | (1 | ) | ||||||
| Total Oilseeds Processing | $ | 209 | $ | 170 | $ | 39 | ||||
Oilseeds Processing operating profit increased $ 39 million to $ 209 million from $ 170 million last year due principally to strong global demand for protein meal and oil. Worldwide crush volumes increased 2.4% to 7.2 million metric tons. Crushing and origination results increased $ 27 million due principally to better crush margins in North America and improved origination results in South America partially offset by a reduction in crush margins in Europe. Value added refining, packaging and biodiesel results increased $ 13 million principally from improved refining volumes and margins. Fiscal year 2008 results include asset abandonment charges of $ 3 million.
Corn Processing
Operating profits consist of earnings from:
| First Quarter | ||||||||||
| FY 2008 | FY 2007 | Inc (Dec) | ||||||||
| Sweeteners and starches | $ | 164 | $ | 119 | $ | 45 | ||||
| Bioproducts | 89 | 170 | (81 | ) | ||||||
| Total Corn Processing | $ | 253 | $ | 289 | $ | (36 | ) | |||
Corn Processing operating profit decreased $ 36 million to $ 253 million from $ 289 million last year due principally to lower ethanol sales prices and volumes and higher net corn costs which were partially offset by favorable risk management results. Sweeteners and Starches operating profit increased $ 45 million to $ 164 million on higher average sweetener and starch selling prices partially offset by higher net corn costs. Bioproducts results declined $ 81 million to $ 89 million due principally to higher net corn costs and lower ethanol selling prices and volumes. Last year’s Bioproducts results reflect the positive impact on ethanol volumes and prices of the phase out of MTBE.
Agricultural Services
Operating profits consist of earnings
from:
| First Quarter | ||||||||||
| FY 2008 | FY 2007 | Inc (Dec) | ||||||||
| Merchandising and handling | $ | 185 | $ | 65 | $ | 120 | ||||
| Transportation | 44 | 50 | (6 | ) | ||||||
| Total Agricultural Services | $ | 229 | $ | 115 | $ | 114 | ||||
Agricultural Services results increased $ 114 million to $ 229 million due principally to improved global merchandising and handling results as volatile commodity market conditions, large North American crops and global wheat shortages provided profit opportunities. Transportation results declined due principally to lower barge freight volumes.
Other
Operating profits consist of earnings from:
| First Quarter | ||||||||||
| FY 2008 | FY 2007 | Inc (Dec) | ||||||||
| Wheat, cocoa and malt | $ | 38 | $ | 43 | $ | (5 | ) | |||
| Financial | 68 | 31 | 37 | |||||||
| Total Other | $ | 106 | $ | 74 | $ | 32 | ||||
Other operating profit increased $ 32 million due principally to improved results of private equity fund investments and gains on sales of securities. This increase was partially offset by a decrease in Wheat, Cocoa and Malt operating profits due principally to decreased cocoa processing results as higher cocoa bean and carrying costs negatively impacted press margins.
Corporate
Corporate results consist of the following:
| First Quarter | ||||||||||||
| FY 2008 | FY 2007 | Inc (Dec) | ||||||||||
| LIFO (charge) | $ | (83 | ) | $ | (17 | ) | $ | (66 | ) | |||
| Investment income | 41 | 18 | 23 | |||||||||
| Corporate costs | (90 | ) | (70 | ) | (20 | ) | ||||||
| Other | (18 | ) | (3 | ) | (15 | ) | ||||||
| Total Corporate | $ | (150 | ) | $ | (72 | ) | $ | (78 | ) | |||
First Quarter FY08 corporate costs include a $ 23 million charge resulting from an organizational realignment initiative.
Conference Call Information
Archer Daniels Midland Company will host a conference call and audio Web cast at 8:00 a.m. Central Time on Tuesday, November 6, 2007 to discuss financial results and provide a Company update. In addition, a financial summary slide presentation will be available to download approximately 60 minutes prior to the start of the call. To listen to the call and download the slide presentation via the Internet, go to: www.admworld.com/webcast. To listen by phone, dial 866-362-4832 or 617-597-5364; the access code is 96292944. Replay of the call will be available beginning on November 6, 2007, at 11:00 a.m. Central Time and ending November 13, 2007. To listen to the replay by telephone, dial 888-286-8010 or 617-801-6888; the access code is: 43916326. To listen to the replay online, visit www.admworld.com/webcast.
Archer Daniels Midland Company (ADM) is the world leader in BioEnergy and has a premier position in the agricultural processing value chain. ADM is one of the world’s largest processors of soybeans, corn, wheat and cocoa. ADM is a leading manufacturer of biodiesel, ethanol, soybean oil and meal, corn sweeteners, flour and other value-added food and feed ingredients. Headquartered in Decatur, Illinois, ADM has over 26,000 employees, more than 240 processing plants and net sales for the fiscal year ended June 30, 2007 of $44 billion. Additional information can be found on ADM’s Web site at http://www.admworld.com/.
(Financial Tables Follow)
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November 6, 2007 |
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ARCHER DANIELS MIDLAND COMPANY |
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CONSOLIDATED STATEMENTS OF EARNINGS |
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| (unaudited) | ||||||||
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Three months ended |
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| September 30 | ||||||||
| 2007 | 2006 | |||||||
| (in millions, except per share amounts) | ||||||||
| Net sales and other operating income | $ | 12,828 | $ | 9,447 | ||||
| Cost of products sold | 11,898 | 8,581 | ||||||
| Gross profit | 930 | 866 | ||||||
| Selling, general and administrative expenses | 354 | 310 | ||||||
| Other income – net | (71 | ) | (20 | ) | ||||
| Earnings before income taxes | 647 | 576 | ||||||
| Income taxes | 206 | 173 | ||||||
| Net earnings | $ | 441 | $ | 403 | ||||
| Diluted earnings per common share | $ | .68 | $ | .61 | ||||
| Average number of shares outstanding | 647 | 661 | ||||||
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Other income – net consists of: |
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| Interest expense | $ | 88 | $ | 97 | ||||
| Investment income | (63 | ) | (61 | ) | ||||
| Net gain on marketable securities transactions | (15 | ) | (4 | ) | ||||
| Equity in earnings of unconsolidated affiliates | (85 | ) | (57 | ) | ||||
| Other – net | 4 | 5 | ||||||
| $ | (71 | ) | $ | (20 | ) | |||
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Operating profit (loss) by segment is as follows: |
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| Oilseeds Processing | $ | 209 | $ | 170 | ||||
| Corn Processing | 253 | 289 | ||||||
| Agricultural Services | 229 | 115 | ||||||
| Other | 106 | 74 | ||||||
| Total segment operating profit | 797 | 648 | ||||||
| Corporate | (150 | ) | (72 | ) | ||||
| Earnings before income taxes | $ | 647 | $ | 576 | ||||
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November 6, 2007 |
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ARCHER DANIELS MIDLAND COMPANY |
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SUMMARY OF FINANCIAL CONDITION |
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(unaudited) |
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September 30, |
June 30, |
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2007 |
2007 |
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(in millions) |
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| NET INVESTMENT IN | ||||||||
| Working capital | $ | 10,082 | $ | 7,787 | ||||
| Property, plant, and equipment | 6,228 | 6,010 | ||||||
| Investments in and advances to affiliates | 2,624 | 2,498 | ||||||
| Long-term marketable securities | 684 | 657 | ||||||
| Other non-current assets | 838 | 831 | ||||||
| $ | 20,456 | $ | 17,783 | |||||
| FINANCED BY | ||||||||
| Short-term debt | $ | 2,523 | $ | 468 | ||||
| Long-term debt, including current maturities | 4,800 | 4,817 | ||||||
| Deferred liabilities | 1,313 | 1,245 | ||||||
| Shareholders' equity | 11,820 | 11,253 | ||||||
| $ | 20,456 | $ | 17,783 | |||||
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SUMMARY OF CASH FLOWS |
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| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| September 30 | ||||||||
| 2007 | 2006 | |||||||
| (in millions) | ||||||||
| Operating Activities | ||||||||
| Net earnings | $ | 441 | $ | 403 | ||||
| Depreciation and asset abandonments | 185 | 171 | ||||||
| Other – net | 17 | 7 | ||||||
| Changes in operating assets and liabilities | (1,853 | ) | (504 | ) | ||||
| Total Operating Activities | (1,210 | ) | 77 | |||||
| Investing Activities | ||||||||
| Purchases of property, plant and equipment | (359 | ) | (251 | ) | ||||
| Net assets of businesses acquired | (5 | ) | (20 | ) | ||||
| Other investing activities | 140 | (45 | ) | |||||
| Total Investing Activities | (224 | ) | (316 | ) | ||||
| Financing Activities | ||||||||
| Long-term debt borrowings | 17 | 10 | ||||||
| Long-term debt payments | (39 | ) | (42 | ) | ||||
| Net borrowings under lines of credit | 2,041 | 168 | ||||||
| Purchases of treasury stock | (60 | ) | – | |||||
| Cash dividends | (74 | ) | (66 | ) | ||||
| Proceeds from exercises of stock options | 7 | 14 | ||||||
| Total Financing Activities | 1,892 | 84 | ||||||
| Increase (decrease) in cash and cash equivalents | 458 | (155 | ) | |||||
| Cash and cash equivalents - beginning of period | 663 | 1,113 | ||||||
| Cash and cash equivalents - end of period | $ | 1,121 | $ | 958 | ||||
Archer Daniels Midland Company
Victoria Podesta
Vice President, Corporate Communications
217/451-8637
or
Dwight Grimestad
Vice President, Investor Relations
217/424-4586