Archer Daniels Midland Company (NYSE: ADM) today reported
financial results for the quarter ended Dec. 31, 2011. The company
reported net earnings for the quarter of $80 million, or $0.12 per
share, both down 89 percent from the same period one year earlier.
Adjusted earnings per share1—which excludes the impact of LIFO,
PHA-related impairment charges and other adjustments—was $0.51 per
share, 58 percent lower than the prior year quarter. Segment
operating profit1, after excluding the impact of the PHA-related
charges, was $648 million, down 52 percent from the record quarter
a year ago.
“It was a tough quarter,” said ADM Chairman and CEO Patricia
Woertz. “The operating environment was challenging. Ongoing
weakness in global oilseeds margins, lower results in corn and poor
international merchandising results hurt our second quarter
profits.
“We remain optimistic about the long-term fundamentals of our
business and the growing earnings power of our company,” added
Woertz. “We continue to execute our plan to drive shareholder
value: prioritizing capital projects, implementing productivity
measures and returning capital to shareholders through increased
dividends and share buybacks.”
Second Quarter 2012 Highlights
- Adjusted EPS of $0.51 excludes a LIFO
charge of $0.06 and asset impairment costs of $0.33.
- Oilseeds Processing profit declined $72
million amid continued weakness in the global margin
environment.
- Corn Processing results decreased $532
million, including $339 million in asset impairment charges related
to the PHA renewable plastic production facility. Net corn costs
for the quarter were high, partly due to economic hedging benefits
recognized in the prior year.
- Agricultural Services profit decreased
$268 million on poor international merchandising results and lower
U.S. export volumes.
- Other businesses’ results decreased by
$181 million, primarily due to a negative mark-to-market timing
effect in cocoa processing. Mark-to-market losses this quarter were
$127 million or approximately $0.13 per share.
- ADM returned $304 million to
shareholders in the quarter, including buying back 6.5 million
shares and increasing our quarterly dividend to 17.5 cents per
share from 16 cents.
Adjusted EPS of 51 Cents, down 69 Cents
Adjusted EPS declined primarily due to the decrease in segment
operating profit. This was partially offset by lower corporate
expenses.
The effective tax rate for the quarter was 31 percent, bringing
the cumulative rate to 30 percent.
Weak Global Oilseeds Margin Environment Continues to Impact
Earnings
Oilseeds operating profit in the second quarter was $253
million, down $72 million from the same period one year
earlier.
Crushing and origination operating profit fell $61 million to
$139 million. Continued weakness in global oilseeds crushing
margins, particularly in Europe, reduced overall results. The prior
year’s quarter reflected a $71 million pretax gain related to the
acquisition of the controlling interest in Golden Peanut. In
addition, last year’s results included significant, negative
mark-to-market timing effects which were not repeated this
year.
Refining, packaging, biodiesel and other generated a profit of
$74 million for the quarter, essentially flat from year-ago
levels.
Oilseeds results in Asia for the quarter were in line with last
year, principally reflecting ADM’s share of the results from its
equity investee Wilmar International Limited.
Additional highlights from the quarter include:
- Integrating Elstar Oils S.A., the
rapeseed crushing, refining, packaging and biodiesel business in
Poland.
- Increasing efficiency at the Olomouc,
Czech Republic, sunflower seed crushing and refining facility.
- Expanding ADM’s biodiesel presence with
plans for a biodiesel plant at ADM’s Lloydminster, Canada, canola
crushing facility.
Corn Processing Results Weaker, Reflecting PHA Impairment
Charge
Corn processing reported an operating loss of $133 million, a
decrease of $532 million from the same period one year earlier. The
loss reflects $339 million in asset impairment charges related to
the PHA renewable plastic production facility at Clinton, Iowa.
Excluding the PHA impairment charges, corn processing operating
profit of $206 million represented a $193 million reduction.
Overall net corn costs were up, reflecting economic hedging
benefits recognized in the prior year.
Sweeteners and starches operating profit decreased $46 million
to $73 million. Export demand for sweeteners remained strong,
though higher net corn costs more than offset higher average
selling prices and increased sales volumes.
Bioproducts results in the quarter decreased $486 million to a
loss of $206 million, including the $339 million PHA impairment
charges and the absence of ownership gains from last year. Ethanol
margins were good into December, when they declined significantly
as industry production increased and exports declined.
Agricultural Services Down from Exceptionally Strong
Year-ago Quarter
Agricultural Services operating profit was $158 million, down
$268 million from the exceptionally strong period one year
earlier.
Merchandising and handling earnings decreased on poor
international merchandising results and a reduction in U.S. grain
exports from the prior year’s record levels. Earnings from
transportation operations were steady.
Other Businesses Deliver Strong Results, Excluding
Significant Mark-to-Market Timing Effects
In the second quarter, profit from ADM’s Other businesses was
$31 million, down $181 million from the same period one year
earlier. Excluding net timing effects, the results in other
processing were comparable to last year’s strong results.
In other processing, profits fell $150 million to $10 million.
Results in the segment were impacted by $127 million in
mark-to-market net timing losses in cocoa. Last year’s results
reflected $23 million in net timing gains. The underlying
performance in cocoa remained strong, driven by cocoa powder
demand. Wheat milling results remained steady.
Other financial declined $31 million to $21 million on lower
results of ADM’s captive insurance subsidiary.
Current Landscape Assessment
Worldwide demand for crops and agricultural products continues
to grow at a stable rate. The South American harvest is beginning
and is expected to help maintain adequate global soybean supplies.
With adequate global crop supplies and a smaller U.S. crop last
year, the U.S. lost export volumes. Global protein meal demand
continues to grow, led by Asia, but crush margins, while improved,
remain weak. U.S. ethanol margins are weak, with excess production
amid reduced exports. U.S. corn sweetener capacity remains tight,
driven by strong export demand.
Conference Call Information
ADM will host a conference call and audio webcast at 8 a.m.
Central Time on Tuesday, Jan. 31, 2012, 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 40983238.
Replay of the call will be available from 9:00 a.m. Central Time on
Jan. 31 to Feb. 7, 2012. To listen to the replay by telephone, dial
855-859-2056 or 404-537-3406; the access code is 40983238. 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 265 processing
plants, 400 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.
1 Non-GAAP financial measures, see pages 5 and 10 for
explanations and reconciliations
Segment Operating Profit and Corporate
Results
A non-GAAP financial measure
(unaudited)
Quarter ended Six months ended December 31
December 31 2011 2010
Change 2011 2010 Change (in millions)
Oilseeds
Processing Operating Profit Crushing and
origination $ 139 $ 200 $ (61 ) $ 254 $ 376 $ (122 )
Refining, packaging, biodiesel and
other
74
78
(4
)
123
154
(31
)
Asia 40 47 (7 ) 97
103 (6 ) Total Oilseeds Processing $ 253
$ 325 $ (72 ) $ 474 $ 633 $ (159 )
Corn Processing Operating Profit Sweeteners and
starches $ 73 $ 119 $ (46 ) $ 101 $ 265 $ (164 ) Bioproducts
(206 ) 280 (486 ) (55 )
475 (530 ) Total Corn Processing $ (133 ) $
399 $ (532 ) $ 46 $ 740 $ (694 )
Agricultural Services Operating Profit Merchandising
and handling $ 109 $ 376 $ (267 ) $ 328 $ 479 $ (151 )
Transportation 49 50 (1 )
74 79 (5 ) Total
Agricultural Services $ 158 $ 426 $ (268 ) $ 402
$ 558 $ (156 )
Other
Operating Profit Processing $ 10 $ 160 $ (150 ) $ 69 $ 186 $
(117 ) Financial 21 52 (31 )
17 10 7 Total Other $ 31
$ 212 $ (181 ) $ 86 $ 196 $ (110 )
Segment Operating Profit $ 309 $ 1,362 $ (1,053 ) $
1,008 $ 2,127 $ (1,119 )
Corporate Results LIFO
credit (charge) $ (59 ) $ (254 ) $ 195 $ 67 $ (377 ) $ 444
Unallocated interest expense - net
(66
)
(83
)
17
(142
)
(172
)
30
Unallocated corporate costs (71 ) (66 ) (5 ) (155 ) (139 ) (16 )
Gains on interest rate swaps - 55 (55 ) - 24 (24 ) Other 8
(16 ) 24 3 (3 )
6 Total Corporate $ (188 ) $ (364 ) $ 176 $
(227 ) $ (667 ) $ 440
Earnings Before Income
Taxes $ 121 $ 998 $ (877 ) $ 781 $ 1,460
$ (679 )
Total segment operating profit is ADM’s consolidated income from
operations before income tax that includes interest expense of each
segment relating to financing operating working capital. 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 and
impacts of its capital structure. 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.
Consolidated Statements of
Earnings
(unaudited)
Quarter ended Six months ended December 31 December 31 2011
2010 2011 2010 (in millions, except per share
amounts) Net sales and other operating income $
23,306 $ 20,930 $ 45,208 $ 37,729 Cost of products sold
22,493 19,696 43,361
35,687 Gross profit 813 1,234 1,847 2,042 Selling, general
and administrative expenses (423 ) (412 ) (830 ) (793 )
Equity in earnings of unconsolidated
affiliates
127 138 251 263 Investment income 22 41 62 65 Interest expense (96
) (115 ) (209 ) (232 ) Asset impairment charges and exit costs (352
) - (352 ) - Other income – net 30 112
12 115 Earnings before income taxes 121
998 781 1,460 Income taxes (38 ) (269 ) (237 )
(389 ) Net earnings including noncontrolling interests 83
729 544 1,071 Less: Net earnings (losses) attributable to
noncontrolling interests 3 (3 ) 4
(6 ) Net earnings attributable to ADM $ 80 $ 732 $
540 $ 1,077 Diluted earnings per common share
$ 0.12 $ 1.14 $ 0.81 $ 1.68
Average number of shares outstanding 667 641
670 641
Other income - net
consists of:
Net gain on marketable securities
transactions
$ 11 $ - $ 16
$
2 Gain on Golden Peanut revaluation - 71 - 71 Gains on interest
rate swaps - 55 - 24 Debt buyback/exchange costs - - (12 ) - Other
– net 19 (14 ) 8 18
$ 30 $ 112 $ 12 $ 115
Summary of Financial Condition
(unaudited)
December 312011
December 312010
(in millions) NET INVESTMENT IN Working capital $ 14,831 $ 16,131
Property, plant, and equipment 9,601 9,194 Investments in and
advances to affiliates 3,211 2,975 Long-term marketable securities
352 823 Other non-current assets 1,128 1,261 $ 29,123
$ 30,384 FINANCED BY Short-term debt $ 834 $ 5,632 Long-term
debt, including current maturities 8,364 7,053 Deferred liabilities
1,760 1,795 Shareholders’ equity 18,165 15,904 $
29,123 $ 30,384
Summary of Cash Flows
(unaudited) Six Months Ended December 31 2011 2010
(in millions) Operating Activities Net earnings $ 544 $ 1,071
Depreciation and amortization 414 463 Asset impairment charges 350
- Other – net 102 (24 ) Changes in operating assets and liabilities
1,631 (5,593 ) Total Operating Activities
3,041 (4,083 )
Investing Activities
Purchases of property, plant and equipment (852 ) (645 ) Net assets
of businesses acquired (206 ) (163 ) Marketable securities – net
195 (358 ) Cash held in a deconsolidated entity (130 ) - Other
investing activities 59 25 Total
Investing Activities (934 ) (1,141 )
Financing Activities
Long-term debt borrowings 91 35 Long-term debt payments (173 ) (237
) Net borrowings (payments) under lines of credit (1,076 ) 5,179
Purchases of treasury stock (427 ) (86 ) Cash dividends (224 ) (192
) Other (49 ) 5 Total Financing Activities
(1,858 ) 4,704
Increase (decrease) in cash and cash
equivalents
249 (520 ) Cash and cash equivalents - beginning of period
615 1,046 Cash and cash equivalents - end of
period $ 864 $ 526
Segment Operating Analysis
(unaudited)
Quarter Ended Six months Ended December 31 December
31 2011 2010 2011 2010 (‘000s of metric tons)
Processed
volumes
Oilseeds Processing 8,191 7,834 15,209 14,909 Corn Processing 6,297
5,908 12,408 11,742 Wheat and cocoa 1,855 1,819 3,736
3,704 Total processing volumes 16,343 15,561 31,353 30,355
Quarter Ended Six months Ended December
31 December 31 2011 2010 2011 2010 (In
millions)
Net sales and other
operating income
Oilseeds Processing $ 7,513 $ 5,848 $ 15,839 $ 11,939 Corn
Processing 3,158 2,449 6,451 4,604 Agricultural Services 11,034
11,165 19,700 18,091 Other 1,601 1,468 3,218
3,095 Total net sales and other operating income $ 23,306 $
20,930 $ 45,208 $ 37,729
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
Quarter Ended Six months Ended December 31
December 31 2011 2010 2011 2010
Reported Earnings Per Share (fully-diluted) $
0.12 $ 1.14 $ 0.81 $ 1.68 Adjustments: LIFO charge/(credit) (a)
0.06 0.25 (0.06 ) 0.37
Asset impairment charges and exit costs
(b)
0.33 - 0.33 - Debt buyback/exchange costs (c) - - 0.01 - Gain on
Golden Peanut revaluation (d) - (0.07 ) - (0.07 ) Gain on interest
rate swaps (e) - (0.05 ) - (0.02 ) Start-up costs (f) - 0.02 - 0.05
Adjust quarterly effective tax rate to
fiscal year average (g)
- (0.09 ) - (0.14 ) Sub-total
adjustments 0.39 0.06 0.28
0.19 Adjusted Earnings Per Share (non-GAAP) $
0.51 $ 1.20 $ 1.09 $ 1.87
(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 exit costs and asset impairment charges related
to the Company’s decision to exit its PHA business, tax effected
using the Company’s U.S. effective income tax rate. (c) 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. (d) The gain on the revaluation of the
Company’s equity interest in Golden Peanut as a result of the
acquisition of the remaining 50% interest, tax effected at the
Company’s U.S. effective income tax rate. (e) The losses or gains
on changes in fair value of certain financial instruments that were
held as de-designated accounting hedges for long-term debt that was
re-marketed in fiscal 2011, tax effected at the Company’s U.S.
effective income tax rate. (f) The costs incurred related to the
Company’s new bioproducts plants included in Corn Processing, tax
effected using the Company’s U.S. effective income tax rate. (g)
The impact to each quarter’s EPS if the fiscal year 2011 final
effective income tax rate of 33% were used each quarter.
Adjusted EPS is ADM’s fully diluted EPS after removal of the
effect on 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 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.
Archer Daniels Midland (NYSE:ADM)
Historical Stock Chart
From May 2024 to Jun 2024
Archer Daniels Midland (NYSE:ADM)
Historical Stock Chart
From Jun 2023 to Jun 2024