Archer Daniels Midland Company Reports First Quarter Earnings of $ .77 Per Share
DECATUR, Ill.--(BUSINESS WIRE)--Archer Daniels Midland Company (NYSE:ADM) today announced earnings of $ 496 million and net sales of $ 14.9 billion for the quarter ended September 30, 2009.
“The ADM team executed well, delivering strong sequential earnings growth,” said Chairman of the Board and Chief Executive Officer Patricia Woertz. “Earnings were significantly better than the second half of fiscal 2009. As we advance our growth strategy, we are using our financial strength to build shareholder value. Looking ahead, we see demand improving in some key markets, and we have the assets and acumen to capture value as the global economy resets.”
(Amounts in millions, except per share data and percentages)
|Segment operating profit||$||774||$||1,176||(34||%)|
|Net earnings attributable to ADM||$||496||$||1,045||(53||%)|
|Earnings per share||$||.77||$||1.62||(52||%)|
|Average number of shares outstanding||644||645||-|
Strategic Investment Activities
To drive earnings growth, the Company advanced its strategy to expand the size and global reach of its core model:
New Accounting Standards
Certain amounts in the prior year’s Consolidated Statements of Earnings, Segment Operating Analysis, Summary of Financial Condition and Summary of Cash Flows have been restated and presentation formats have been modified to apply the requirements of new accounting standards ASC Topic 810 and ASC Topic 470-20. Effective July 1, 2009, the Company adopted this amended guidance which requires retrospective application to all periods presented.
Discussion of Operations
Net sales decreased 29 % to $ 14.9 billion primarily due to decreased average selling prices and, to a lesser extent, foreign exchange translation impacts. Average selling prices decreased in line with year-over-year declines in underlying commodity costs. There were no material changes in overall sales quantities.
A summary of segment operating profit and net earnings is as follows:
|Segment operating profit||774||1,176||(402||)|
|Earnings before income taxes||717||1,486||(769||)|
|Net earnings including noncontrolling interests||497||1,046||(549||)|
|Less: Net earnings attributable to noncontrolling interests||(1||)||(1||)||–|
|Net earnings attributable to ADM||$||496||$||1,045||$||(549||)|
Net earnings attributable to ADM decreased $ 549 million, due principally to the $ 402 million decrease in segment operating profit and the reduced impact on Corporate results of the change in LIFO inventory valuations. Income taxes decreased due principally to decreased pretax earnings, partially offset by an increased effective tax rate resulting from changes in the geographic mix of pretax earnings.
Oilseeds Processing Operating Profit
|Crushing and origination||$||135||$||339||$||(204||)|
|Refining, packaging, biodiesel and other||70||106||(36||)|
|Total Oilseeds Processing||$||284||$||510||$||(226||)|
Oilseeds Processing operating profit decreased $ 226 million. Crushing and origination results declined $ 204 million due to lower production volumes resulting from a short global soybean supply. Crushing margins and fertilizer results decreased from high prior-year levels as demand was weaker.
Refining, packaging, biodiesel and other operating profit decreased $ 36 million, due principally to lower sales volumes in North America and reduced biodiesel margins in Europe and South America.
Oilseeds results in Asia increased $ 14 million as the Company’s investments, principally the equity interest in Wilmar International Limited, continued to perform well.
Corn Processing Operating Profit
|Sweeteners and starches||$||194||$||65||$||129|
|Total Corn Processing||$||188||$||118||$||70|
Corn Processing operating profit increased $ 70 million. Sweeteners and starches operating profit increased $ 129 million due to lower net corn and manufacturing costs and higher year-over-year average sweetener selling prices.
Bioproducts operating profit decreased $ 59 million. Ethanol selling prices decreased due to lower gasoline prices and decreased gasoline demand. Bioproducts results were also negatively impacted by low lysine selling prices and by increased startup costs related to the Company’s industrial chemicals and sugar businesses.
Agricultural Services Operating Profit
|Merchandising and handling||$||157||$||385||$||(228||)|
|Total Agricultural Services||$||175||$||428||$||(253||)|
Agricultural Services operating profit decreased $ 253 million. Merchandising and handling results were lower than the year-ago quarter due to reduced demand resulting from the weaker global economy and less volatile commodity market conditions. Transportation results declined due to lower barge freight rates and reduced northbound barge activity.
Other Operating Profit
Other operating profit increased $ 7 million. Other processing operating profit increased $ 4 million as improved global wheat milling margins and Gruma S.A.B. de C.V. equity earnings were partially offset by a decline in cocoa processing margins and sales volumes. Results for the quarter ended September 30, 2008, included $12 million of profit related to the Company’s malting business which was disposed of on July 31, 2008.
Other financial operating profit increased $ 3 million for the quarter, due to improved captive insurance results partially offset by weaker results of the Company’s brokerage services business caused by the low short-term interest rate environment.
|Investment (expense)/income - net||(65||)||(29||)||(36||)|
|Gain/(loss) on security transactions||11||(9||)||20|
Corporate results decreased $ 367 million. Market prices for LIFO-based inventories were generally lower resulting in a decrease in LIFO inventory reserves of $76 million compared to a $453 million decrease in last year’s quarter. Investment expense - net increased $ 36 million reflecting a decrease in interest income caused by lower short-term rates and lower working capital requirements of the operating segments. Corporate costs were down $ 25 million as employee-related costs and provisions for doubtful accounts decreased.
Conference Call Information
Archer Daniels Midland Company will host a conference call and audio webcast at 8:00 a.m. Central Time on Tuesday, November 3, 2009, 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 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 800-901-5247 or 617-786-4501; the access code is 76474255. Replay of the call will be available beginning at 11:00 a.m. Central Time on November 3 to November 10, 2009. To listen to the replay by telephone, dial 888-286-8010 or 617-801-6888; the access code is: 25626820. To listen to the replay online, visit www.adm.com/webcast.
Every day, the 28,000 people of Archer Daniels Midland Company (NYSE: ADM) turn crops into renewable products that meet the demands of a growing world. At more than 230 processing plants, we convert corn, oilseeds, wheat and cocoa into products for food, animal feed, chemical and energy uses. We operate the world’s premier crop origination and transportation network, connecting crops and markets in more than 60 countries. Our global headquarters is in Decatur, Illinois, and our net sales for the fiscal year ended June 30, 2009, were $69 billion. For more information about our Company and our products, visit www.adm.com.
Archer Daniels Midland Company
Consolidated Statements of Earnings
|(in millions, except per share amounts)|
|Net sales and other operating income||$||14,921||$||21,160|
|Cost of products sold||13,948||19,293|
|Selling, general and administrative expenses||354||409|
|Other income – net||(98||)||(28||)|
|Earnings before income taxes||717||1,486|
|Net earnings including noncontrolling interests||497||1,046|
|Less: Net earnings attributable to noncontrolling interests||(1||)|| |
|Net earnings attributable to ADM||$||496||$||1,045|
|Diluted earnings per common share||$||.77||$||1.62|
|Average number of shares outstanding||644||645|
Other income – net consists of:
|Net gain on marketable securities transactions||(1||)||(9||)|
|Equity in earnings of unconsolidated affiliates||(152||)||(123||)|
|Other – net||(13||)||20|
Archer Daniels Midland Company
Segment Operating Analysis
Net sales and other operating income
|Total net sales and other operating income||$||14,921||$||21,160|
Segment operating profit (loss)
|Total segment operating profit||774||1,176|
|Corporate (1)|| |
|Earnings before income taxes||$||717||$||1,486|
|(in 000s metric tons)|
|Wheat, cocoa and malt||1,910||1,877|
|Total processing volumes||12,903||13,490|
|(1)||Includes LIFO credit of $ 76 million for the quarter ended September 30, 2009 and $453 million for the quarter ended September 30, 2008, respectively.|
Archer Daniels Midland Company
Summary of Financial Condition
September 30 2009
|June 30 2009|
|NET INVESTMENT IN|
|Property, plant, and equipment||8,366||7,950|
|Investments in and advances to affiliates||2,559||2,459|
|Long-term marketable securities||644||626|
|Other non-current assets||1,137||1,139|
|Long-term debt, including current maturities||7,623||7,640|
|SUMMARY OF CASH FLOWS|
|Depreciation and asset abandonments||196||177|
|Other – net||37||(457||)|
|Changes in operating assets and liabilities||1,262||3,914|
|Total Operating Activities||1,992||4,680|
|Purchases of property, plant and equipment||(497||)||(483||)|
|Other investing activities||68||(28||)|
|Total Investing Activities||(429||)||(299||)|
|Long-term debt borrowings||-||102|
|Long-term debt payments||(34||)||(15||)|
|Net repayments under lines of credit||(107||)||(2,570||)|
|Purchases of treasury stock||-||(100||)|
|Total Financing Activities||(228||)||(2,659||)|
|Increase in cash and cash equivalents||1,335||1,722|
|Cash and cash equivalents - beginning of period||1,055||810|
|Cash and cash equivalents - end of period||$||2,390||$||2,532|
Archer Daniels Midland Company
David Weintraub, 217-424-5413
Director, External Communications
Dwight Grimestad, 217-424-4586
Vice President, Investor Relations