ADM Reports First Quarter 2012.5 Results
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
DECATUR, Ill. -- October 30, 2012
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 share^1 were $0.50,
primarily reflecting a $0.16 charge related to ADM’s planned divestment of
Gruma. Segment operating profit^1 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
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
*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
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
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
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
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
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.
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,
Segment Operating Profit and Corporate Results((1))
A non-GAAP financial measure (unaudited)
2012 2011^(1) Change
Oilseeds Processing Operating Profit
Crushing and origination $ 256 $ 106 $ 150
Refining, packaging, biodiesel
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 )
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
(In millions, except per share amounts)
Net sales and other operating $ 21,808 $ 21,902
Cost of products sold 21,002 20,868
Gross profit 806 1,034
Selling, general and (390 ) (407 )
Asset impairment charge (146 ) -
Equity in earnings of 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 184 461
Less: Net earnings (losses)
attributable to noncontrolling 2 1
Net earnings attributable to ADM $ 182 $ 460
Diluted earnings per common share $ 0.28 $ 0.68
Average number of shares 661 674
Other income (expense) - net
Net gain on marketable securities $ 2 $ 5
Debt buyback/exchange costs - (12 )
Other – net (14 ) (11 )
$ (12 ) $ (18 )
Summary of Financial Condition
September 30, June 30,
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
Short-term debt $ 3,678 $ 2,108
Long-term debt, including current 6,815 8,212
Deferred liabilities 2,210 2,223
Shareholders’ equity 18,441 18,169
$ 31,144 $ 30,712
Summary of Cash Flows
Three Months Ended
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
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 )
Long-term debt borrowings 3 2
Long-term debt payments (1,412 ) (85 )
Net borrowings (repayments) under lines of 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
('000s of metric tons)
Oilseeds 7,462 7,018
Corn 6,281 6,111
Milling and Cocoa 1,790 1,881
Total processed volumes 15,533 15,010
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
Reported Earnings Per Share (fully-diluted) $0.28 $0.68
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.
The impairment charge related to the Company’s investments associated
(b) with Gruma, tax effected using the applicable U.S. and Mexican tax
(c) The tax impact of foreign-exchange remeasurement of certain Brazilian
The pretax costs incurred to extinguish or modify the Company’s
(d) 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
^1 Non-GAAP financial measures, see pages 5 and 10 for explanations and
Archer Daniels Midland Company
David Weintraub, 217-424-5413
Ruth Ann Wisener, 217-451-8286
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