By Kristin Jones
Agricultural giant Archer Daniels Midland Co. (ADM) said it
expects to realize an additional $200 million in savings by the end
of 2014, and sees $1 billion in working cash improvements by the
end of this year.
The U.S. grain trader and processor said its restructuring and
other cost-cutting measures in 2012 have already resulted in
savings of $150 million. The additional $200 million is seen coming
from cutting down energy and water use, standardizing company
processes and inventory controls, as well as other initiatives.
ADM has freed up $1 billion in cash through activities including
better inventory management, and expects the next $1 billion to
come from similar efforts.
The company recently said that it would proceed with a
long-coveted acquisition of Australia's largest grain company,
GrainCorp Ltd. (GNC.AU). The $3.5 billion deal is expected to give
ADM a crucial foothold for exporting grain to China and the rest of
Asia, where strong demand has driven a global commodities boom.
The proposed deal, which is still subject to conditions, led
Moody's Investors Service to place the company on review for a
downgrade.
ADM said it expects an earnings boost from the acquisition in
the first full year, and sees a gain of $49 million to $69 million
by the end of the second year based on synergies between the two
companies.
Shares rose 2% in recent trading to $34.72. The stock is up 27%
since the start of the year.
Write to Kristin Jones at kristin.jones@dowjones.com
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