ADM Reports First Quarter 2012.5 Results
ADM Reports First Quarter 2012.5 Results
10/30/2012
Reported EPS of $0.28 and adjusted EPS of $0.50, down from year-ago quarter
Operating profit declined as strong Oilseeds results were offset by negative ethanol margins
DECATUR, Ill.--(BUSINESS WIRE)--Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended Sept. 30, 2012. The company reported net earnings for the quarter of $182 million, or $0.28 per share, down from $0.68 per share in the same period one year earlier. Adjusted earnings per share1 were $0.50, primarily reflecting a $0.16 charge related to ADM’s planned divestment of Gruma. Segment operating profit1 was $498 million, including a $146 million charge related to Gruma.
“Our first-quarter segment results were mixed,” said ADM Chairman and CEO Patricia Woertz. “Oilseeds performance was strong, the ethanol industry experienced sustained negative margins, and Agricultural Services managed well through a complicated quarter, challenged by the drought.
“During the first quarter, we focused on actions that will improve returns. We made progress in our ongoing portfolio management efforts. And I’m proud of our efforts and the results of our work to reduce costs and capital.
“As we look ahead to 2013, we are bringing online our large Paraguay soybean processing plant as South American farmers are responding to market conditions with record plantings, and we are implementing plans to navigate the tight U.S. crop supply.
“Longer-term, we remain optimistic as we see continued growth in global demand for protein meal and other agricultural products. We continue to execute our strategy, aligning our business to serve rising demand from customers around the world.”
First Quarter 2012.5 Financial Highlights
- Adjusted EPS of $0.50 excludes a Gruma-related charge of $0.16 per share and a LIFO charge of $0.05 per share.
- Oilseeds Processing profit increased $116 million, with year-over-year improvements in our crushing and origination business in all regions.
- Corn Processing profit decreased $115 million as continued negative ethanol margins more than offset improved results from sweeteners and starches.
- Agricultural Services profit fell $99 million, excluding the Gruma charge, as smaller crops reduced U.S. merchandising and handling results.
- On track to achieve $150 million in annual run-rate savings ahead of schedule.
Adjusted EPS of 50 Cents, down 8 Cents
Adjusted EPS decreased primarily due to lower segment operating profit.
This quarter’s effective tax rate was 38 percent and included special factors. Excluding these items, the effective tax rate was 30 percent, in line with last year’s first quarter.
Oilseeds Earnings Improve Across All Three Regions
Oilseeds operating profit in the first quarter was $336 million, up $116 million from the same period one year earlier.
Crushing and origination operating profit was $256 million, up $150 million from the year-ago quarter on strong improvements by all three geographies. ADM’s U.S. soybean operations delivered very strong results amid good U.S. demand and meal exports. In Europe, soybean and rapeseed crushing earnings improved significantly.
Refining, packaging, biodiesel and other generated a profit of $28 million for the quarter, down $27 million, with steady results in North and South America offset by weaker European biodiesel results.
Cocoa and other results increased $27 million. Weaker cocoa press margins were offset by the absence of last year’s significant negative mark-to-market impacts.
Oilseeds results in Asia for the quarter were down $34 million from the prior year’s first quarter, principally reflecting ADM’s share of the results from its equity investee Wilmar International Limited.
Corn Processing Results Weak on Continued Ethanol Industry Challenges
Corn processing operating profit was $68 million, a decrease of $115 million from the same period one year earlier.
Sweeteners and starches operating profit increased $64 million to $94 million, as tight sweetener industry capacity supported higher year-over-year selling prices. The year-ago quarter’s results were negatively impacted by higher net corn costs related to the timing effects of economic hedges.
Bioproducts results in the quarter decreased $179 million to a loss of $26 million. Weak U.S. ethanol exports, strong Brazilian imports and slow E15 implementation kept industry margins negative.
Agricultural Services Down From Strong Prior-Year Results
Agricultural Services operating profit excluding the Gruma charge was $224 million, down $99 million from the same period one year earlier.
Merchandising and handling earnings fell $101 million to $108 million, mostly due to weaker U.S. merchandising results impacted by the smaller U.S. harvest.
Transportation results decreased $9 million to $19 million impacted by low barge freight utilization driven by reduced corn exports.
Milling and other results increased $11 million, excluding the Gruma charge. Milling results remained strong, and ADM Alliance Nutrition saw improved margins amid stronger demand.
Other Financial Results Improve
Operating profit from ADM’s Other Financial businesses was $16 million, up $21 million, with improved results from captive insurance and ADM Investor Services.
Conference Call Information
ADM will host a conference call and audio webcast Tuesday, Oct. 30, 2012, at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call.
To listen to the call via the Internet or to download the slide presentation, go to www.adm.com/webcast. To listen by telephone, dial (888) 522-5398 in the U.S. or (706) 902-2121 if calling from outside the U.S. The access code is 31529634.
A replay of the call will be available from Oct. 31, 2012 to Nov. 6, 2012. To listen to the replay by telephone, dial (855) 859-2056 in the U.S. or (404) 537-3406 if calling from outside the U.S. The access code is 31529634. To listen to the replay online, visit www.adm.com/webcast.
About ADM
For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve vital needs. Today, 30,000 ADM employees around the globe convert oilseeds, corn, wheat and cocoa into products for food, animal feed, industrial and energy uses. With more than 270 processing plants, 420 crop procurement facilities, and the world’s premier crop transportation network, ADM helps connect the harvest to the home in more than 160 countries. For more information about ADM and its products, visit www.adm.com.
| Segment Operating Profit and Corporate Results((1)) | |||||||||||||||
|
A non-GAAP financial measure (unaudited) |
|||||||||||||||
| Quarter ended | |||||||||||||||
| September 30 | |||||||||||||||
| 2012 |
2011(1) |
Change | |||||||||||||
| (In millions) | |||||||||||||||
| Oilseeds Processing Operating Profit | |||||||||||||||
| Crushing and origination | $ | 256 | $ | 106 | $ | 150 | |||||||||
|
Refining, packaging, biodiesel
and other |
28 |
55 |
(27 |
) |
|||||||||||
| Cocoa and other | 29 | 2 | 27 | ||||||||||||
| Asia | 23 | 57 | (34 | ) | |||||||||||
| Total Oilseeds Processing | $ | 336 | $ | 220 | $ | 116 | |||||||||
| Corn Processing Operating Profit | |||||||||||||||
| Sweeteners and starches | $ | 94 | $ | 30 | $ | 64 | |||||||||
| Bioproducts | (26 | ) | 153 | (179 | ) | ||||||||||
| Total Corn Processing | $ | 68 | $ | 183 | $ | (115 | ) | ||||||||
| Agricultural Services Operating Profit | |||||||||||||||
| Merchandising and handling | $ | 108 | $ | 209 | $ | (101 | ) | ||||||||
| Transportation | 19 | 28 | (9 | ) | |||||||||||
| Milling and other (excl. charges) | 97 | 86 | 11 | ||||||||||||
| Asset impairment charge | (146 | ) | - | (146 | ) | ||||||||||
| Total Agricultural Services | $ | 78 | $ | 323 | $ | (245 | ) | ||||||||
| Other Operating Profit | |||||||||||||||
| Financial | 16 | (5 | ) | 21 | |||||||||||
| Total Other | $ | 16 | $ | (5 | ) | $ | 21 | ||||||||
| Segment Operating Profit | $ | 498 | $ | 721 | $ | (223 | ) | ||||||||
| Corporate Results | |||||||||||||||
| LIFO credit (charge) | $ | (53 | ) | $ | 126 | $ | (179 | ) | |||||||
| Interest expense - net | (107 | ) | (98 | ) | (9 | ) | |||||||||
| Unallocated corporate costs | (70 | ) | (84 | ) | 14 | ||||||||||
| Debt buyback costs | - | (4 | ) | 4 | |||||||||||
| Other | 27 | (1 | ) | 28 | |||||||||||
| Total Corporate | $ | (203 | ) | $ | (61 | ) | $ | (142 | ) | ||||||
| Earnings Before Income Taxes | $ | 295 | $ | 660 | $ | (365 | ) | ||||||||
Total segment operating profit is ADM’s consolidated income from operations before income tax that excludes certain corporate items. Management believes that segment operating profit is a useful measure of ADM’s performance because it provides investors information about ADM’s business unit performance excluding certain corporate overhead costs. Total segment operating profit is a non-GAAP financial measure and is not intended to replace earnings before income tax, the most directly comparable GAAP financial measure. Total segment operating profit is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to income before income taxes or any other measure of consolidated operating results under U.S. GAAP.
(1) Beginning fourth quarter fiscal 2012, ADM realigned segment operating profit to reflect a change in how the company manages its businesses. As a result, ADM now reports Cocoa processing results as part of a new category in Oilseeds called “Cocoa and Other” and Milling results in an Agricultural Services category called “Milling and Other”. In addition, beginning fourth quarter fiscal 2012, the company discontinued the allocation of working capital interest to the operating segments. Prior periods have been restated to conform to the current period presentation.
| Consolidated Statements of Earnings | ||||||||||
|
(unaudited) |
||||||||||
| Quarter ended | ||||||||||
| September 30 | ||||||||||
| 2012 | 2011 | |||||||||
| (In millions, except per share amounts) | ||||||||||
| Net sales and other operating income | $ | 21,808 | $ | 21,902 | ||||||
| Cost of products sold | 21,002 | 20,868 | ||||||||
| Gross profit | 806 | 1,034 | ||||||||
| Selling, general and administrative expenses | (390 | ) | (407 | ) | ||||||
| Asset impairment charge | (146 | ) | - | |||||||
|
Equity in earnings of unconsolidated affiliates |
113 | 124 | ||||||||
| Investment income | 30 | 40 | ||||||||
| Interest expense | (106 | ) | (113 | ) | ||||||
| Other income (expense) – net | (12 | ) | (18 | ) | ||||||
| Earnings before income taxes | 295 | 660 | ||||||||
| Income taxes | (111 | ) | (199 | ) | ||||||
| Net earnings including noncontrolling interests | 184 | 461 | ||||||||
| Less: Net earnings (losses) attributable to noncontrolling interests | 2 | 1 | ||||||||
| Net earnings attributable to ADM | $ | 182 | $ | 460 | ||||||
| Diluted earnings per common share | $ | 0.28 | $ | 0.68 | ||||||
| Average number of shares outstanding | 661 | 674 | ||||||||
|
Other income (expense) - net consists of: |
||||||||||
|
Net gain on marketable securities transactions |
$ | 2 | $ | 5 | ||||||
| Debt buyback/exchange costs | - | (12 | ) | |||||||
| Other – net | (14 | ) | (11 | ) | ||||||
| $ | (12 | ) | $ | (18 | ) | |||||
| Summary of Financial Condition | ||||||||
|
(unaudited) |
||||||||
| September 30, | June 30, | |||||||
| 2012 | 2012 | |||||||
| (in millions) | ||||||||
| NET INVESTMENT IN | ||||||||
| Working capital | $ | 16,538 | $ | 16,113 | ||||
| Property, plant, and equipment | 9,883 | 9,812 | ||||||
| Investments in and advances to affiliates | 3,379 | 3,388 | ||||||
| Long-term marketable securities | 246 | 262 | ||||||
| Other non-current assets | 1,098 | 1,137 | ||||||
| $ | 31,144 | $ | 30,712 | |||||
| FINANCED BY | ||||||||
| Short-term debt | $ | 3,678 | $ | 2,108 | ||||
| Long-term debt, including current maturities | 6,815 | 8,212 | ||||||
| Deferred liabilities | 2,210 | 2,223 | ||||||
| Shareholders’ equity | 18,441 | 18,169 | ||||||
| $ | 31,144 | $ | 30,712 | |||||
| Summary of Cash Flows | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| September 30 | ||||||||||
| 2012 | 2011 | |||||||||
| (in millions) | ||||||||||
| Operating Activities | ||||||||||
| Net earnings | $ | 184 | $ | 461 | ||||||
| Depreciation and amortization | 217 | 207 | ||||||||
| Asset impairment charge | 146 | - | ||||||||
| Other – net | 111 | 114 | ||||||||
| Changes in operating assets and liabilities | (175 | ) | 1,305 | |||||||
| Total Operating Activities | 483 | 2,087 | ||||||||
|
Investing Activities |
||||||||||
| Purchases of property, plant and equipment | (252 | ) | (443 | ) | ||||||
| Net assets of businesses acquired | (21 | ) | (12 | ) | ||||||
| Marketable securities – net | (319 | ) | 300 | |||||||
| Cash held in a deconsolidated entity | - | (130 | ) | |||||||
| Other investing activities | 30 | 36 | ||||||||
| Total Investing Activities | (562 | ) | (249 | ) | ||||||
|
Financing Activities |
||||||||||
| Long-term debt borrowings | 3 | 2 | ||||||||
| Long-term debt payments | (1,412 | ) | (85 | ) | ||||||
| Net borrowings (repayments) under lines of credit | 1,547 | (663 | ) | |||||||
| Debt repayment premium and costs | - | (32 | ) | |||||||
| Purchases of treasury stock | - | (240 | ) | |||||||
| Cash dividends | (115 | ) | (107 | ) | ||||||
| Other | - | (8 | ) | |||||||
| Total Financing Activities | 23 | (1,133 | ) | |||||||
|
Increase (decrease) in cash and cash equivalents |
(56 | ) | 705 | |||||||
| Cash and cash equivalents - beginning of period | 1,291 | 615 | ||||||||
| Cash and cash equivalents - end of period | $ | 1,235 | $ | 1,320 | ||||||
| Segment Operating Analysis | |||||||
|
(unaudited) |
|||||||
| Quarter Ended | |||||||
| September 30 | |||||||
| 2012 | 2011 | ||||||
|
|
('000s of metric tons) |
||||||
|
Processed volumes |
|||||||
| Oilseeds | 7,462 | 7,018 | |||||
| Corn | 6,281 | 6,111 | |||||
| Milling and Cocoa | 1,790 | 1,881 | |||||
| Total processed volumes | 15,533 | 15,010 | |||||
| Quarter Ended | |||||||
| September 30 | |||||||
| 2012 | 2011 | ||||||
|
|
(in millions) |
||||||
|
Net sales and other operating income |
|||||||
| Oilseeds Processing | $ | 9,688 | $ | 9,071 | |||
| Corn Processing | 3,126 | 3,293 | |||||
| Agricultural Services | 8,956 | 9,510 | |||||
| Other | 38 | 28 | |||||
| Total net sales and other | |||||||
| operating income | $ | 21,808 | $ | 21,902 | |||
| Adjusted Earnings Per Share | ||||||||||
| A non-GAAP financial measure | ||||||||||
|
(unaudited) |
||||||||||
| Quarter Ended | ||||||||||
| September 30 | ||||||||||
| 2012 | 2011 | |||||||||
| Reported Earnings Per Share (fully-diluted) | $0.28 | $0.68 | ||||||||
| Adjustments: | ||||||||||
| LIFO charge/(credit) (a) | 0.05 | (0.11 | ) | |||||||
| Asset impairment charge (b) | 0.16 | - | ||||||||
| Brazil income tax remeasurement (c) | 0.01 | - | ||||||||
| Debt buyback/exchange costs (d) | - | 0.01 | ||||||||
| Adjusted Earnings Per Share (non-GAAP) | $0.50 | $0.58 | ||||||||
| (a) | The Company’s pretax changes in its LIFO reserves during the period, tax effected using the Company’s U.S. effective income tax rate. | ||
| (b) | The impairment charge related to the Company’s investments associated with Gruma, tax effected using the applicable U.S. and Mexican tax rates. | ||
| (c) | The tax impact of foreign-exchange remeasurement of certain Brazilian assets. | ||
| (d) |
The pretax costs incurred to extinguish or modify the Company’s outstanding debt prior to maturity, tax effected using the Company’s U.S. effective income tax rate. |
||
Adjusted EPS is ADM’s fully diluted EPS after removal of the effect on Reported EPS of certain specified items as more fully described above. Management believes that Adjusted EPS is a useful measure of ADM’s performance because it provides investors additional information about ADM’s operations allowing better evaluation of ongoing business performance. Adjusted EPS is a non-GAAP financial measure and is not intended to replace or be an alternative to EPS, the most directly comparable GAAP financial measure, or any other measures of operating results under GAAP. Earnings amounts in the tables above have been divided by the company’s diluted shares outstanding for each respective quarter in order to arrive at an adjusted EPS amount for each specified item.
1 Non-GAAP financial measures, see pages 5 and 10 for explanations and reconciliations
Archer Daniels Midland Company
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or
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