DECATUR, Ill.--(BUSINESS WIRE)--Archer Daniels Midland Company (NYSE:ADM) today reported second-quarter net earnings of $ 732 million and record quarterly segment operating profit of $ 1.4 billion for the quarter ended December 31, 2010, up $ 165 million and $ 392 million, respectively, from the same period one year earlier.
- ADM earned $ 1.14 diluted EPS, a 30 percent increase versus last year’s $ 0.88 second quarter.
- Segment operating profit of $ 1.4 billion was a record, up 40 percent from the same period in the prior year.
- Oilseeds Processing profit declined $ 27 million as improved results from operations were more than offset by mark-to-market timing effects.
- Corn Processing profit increased $ 109 million on favorable corn ownership, increased ADM ethanol production and strong export sweetener demand.
- Agricultural Services results increased $ 276 million as ADM was well positioned to meet strong global grain demand and shipped record volumes through its U.S. origination and export network.
“The ADM team delivered outstanding performance across the board, resulting in record operating profit. Amid strong demand and regional dislocations, we used our vast global network to deliver for our customers and shareholders,” said Patricia Woertz, ADM chairman and CEO. “Looking ahead, global markets remain dynamic. In this environment, we use ADM’s exceptional capabilities, our unique global asset base and the insights of our team to drive value and to serve vital needs.”
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Financial Highlights (Amounts in millions, except per share data) |
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Quarter Ended
December 31 |
Six Months Ended
December 31 |
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| 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||
| Segment operating profit | $ | 1,362 | $ | 970 | $ | 392 | $ | 2,127 | $ | 1,744 | $ | 383 | ||||||
| Net earnings | $ | 732 | $ | 567 | $ | 165 | $ | 1,077 | $ | 1,063 | $ | 14 | ||||||
| Diluted earnings per share | $ | 1.14 | $ | 0.88 | $ | 0.26 | $ | 1.68 | $ | 1.65 | $ | 0.03 | ||||||
| Average shares outstanding | 641 | 645 | 641 | 644 | ||||||||||||||
A summary of segment operating profit and net earnings follows:
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Quarter ended December 31 |
Six months ended December 31 |
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| 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||
| Oilseeds Processing | $ | 325 | $ | 352 | $ | (27 | ) | $ | 633 | $ | 636 | $ | (3 | ) | |||||||||||
| Corn Processing | 399 | 290 | 109 | 740 | 478 | 262 | |||||||||||||||||||
| Agricultural Services | 426 | 150 | 276 | 558 | 325 | 233 | |||||||||||||||||||
| Other | 212 | 178 | 34 | 196 | 305 | (109 | ) | ||||||||||||||||||
| Segment operating profit | 1,362 | 970 | 392 | 2,127 | 1,744 | 383 | |||||||||||||||||||
| Corporate | (364 | ) | (186 | ) | (178 | ) | (667 | ) | (243 | ) | (424 | ) | |||||||||||||
| Earnings before income taxes | 998 | 784 | 214 | 1,460 | 1,501 | (41 | ) | ||||||||||||||||||
| Income taxes | (269 | ) | (223 | ) | (46 | ) | (389 | ) | (443 | ) | 54 | ||||||||||||||
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Net earnings including noncontrolling interests |
729 |
561 |
168 |
1,071 |
1,058 |
13 |
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Less: Net earnings (losses) attributable to noncontrolling interests |
|
(3 |
) |
(6 |
) |
3 |
(6 |
) |
(5 |
) |
(1 |
) |
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| Net earnings |
$ |
732 |
$ |
567 |
$ |
165 |
$ |
1,077 |
$ |
1,063 |
$ |
14 |
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Discussion of Operations
Net earnings for the second quarter of $ 732 million increased $ 165 million due to a $ 392 million increase in segment operating profit. This increase was partially offset by changes in LIFO inventory valuations, included in corporate, caused by higher agricultural commodity prices. Earnings before income taxes include a LIFO charge of $ 254 million this quarter, or $ 0.25 per share, compared to a LIFO charge of $ 54 million last year, or $ 0.05 per share. The company’s effective income tax rate for the quarter was 27 percent, comparable to the prior year’s second quarter rate of 28 percent.
Oilseeds Processing
Oilseeds operating profit in the second quarter declined $ 27 million to $ 325 million.
Crushing and origination operating profit increased $ 7 million to $ 200 million for the quarter. Globally, ADM’s crushing volumes were essentially flat compared to the year-ago quarter. ADM’s acquisition of the controlling interest in Golden Peanut, and the resulting revaluation, generated a pretax gain of $ 71 million. South American results strengthened on improved fertilizer and grain origination income. European results were lower due to mark-to-market timing effects related to substantial increases in commodity prices, effects that were partially offset by improved margins, including the impact of favorable softseed positioning.
Refining, packaging, biodiesel and other generated a profit of $ 78 million for the quarter, similar to prior year results.
Oilseeds results in Asia declined $ 36 million to $ 47 million for the quarter, reflecting ADM’s share of the weaker results from its equity investee, Wilmar International Limited.
Corn Processing
For the quarter, corn processing operating profit increased $ 109 million to a profit of $ 399 million, enhanced by favorable corn ownership positions. Corn processing volumes were up 24 percent, reflecting the ramp-up of the company’s two new dry mills.
Sweeteners and starches operating profit decreased $ 52 million from the prior year to $ 119 million, due to lower average selling prices and higher net corn costs. Sales volumes were up due to improved export sweetener shipments and stronger U.S. demand for industrial starches.
Bioproducts profit in the quarter rose $ 161 million to $ 280 million, driven by improved ethanol margins and volumes, and by stronger lysine margins.
Agricultural Services
Agricultural Services operating profit increased $ 276 million to $ 426 million for the second quarter.
Merchandising and handling profit increased $ 273 million to $ 376 million on strong results from global merchandising operations and on record ADM export volumes from the United States.
Earnings from transportation operations improved on higher barge-freight rates and volumes.
Other
In the second quarter, profits from ADM’s Other business units increased $ 34 million to $ 212 million.
In Other processing, profits in wheat milling and cocoa operations were similar to last year’s strong results.
Other financial results increased $ 33 million mainly due to reduced provisions in the company’s captive insurance subsidiary.
Corporate Results
Corporate results decreased $ 178 million principally due to a $ 200 million change in LIFO reserves, higher expense for the elimination of minority interests, and higher corporate interest. Partially offsetting these items were $ 55 million of unrealized gains on interest rate swaps.
Current Market Conditions
Global supplies of corn, soybeans, canola and rapeseed remain dynamic. The global supply of wheat is ample, though there are some regional dislocations and quality issues. South American farmers have begun harvesting their crops. In North America, farmers are considering planting decisions.
Globally, demand for crops and processed products remains strong. Global demand for protein meal is being led by good demand from Asia. The one-year extensions of the blenders’ credits and the U.S. EPA’s recent decisions on enhanced ethanol blending are supportive of biofuels. U.S. corn-based ethanol remains the most competitive ethanol in the global market. Mexican demand for corn sweetener continues to be strong.
Conference Call Information
ADM will host a conference call and audio webcast at 8:30 a.m. Central Time on Tuesday, Feb. 1, 2011, 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 online or to download the slide presentation, go to www.adm.com/webcast. To listen by telephone, dial 866-362-4829 or 617-597-5346; the access code is 66596395. Replay of the call will be available from 12:30 p.m. Central Time on Feb. 1 to Feb. 8, 2011. To listen to the replay by telephone, dial 888-286-8010 or 617-801-6888; the access code is 18889828. To listen to the replay online, visit www.adm.com/webcast.
About ADM
Every day, the 29,000 people of Archer Daniels Midland Company (NYSE: ADM) turn crops into renewable products that meet the demands of a growing world. At more than 240 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, 2010, were $62 billion. For more information about our company and our products, visit www.adm.com.
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Segment Operating Analysis (unaudited) |
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Quarter ended December 31 |
Six months ended December 31 |
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| 2010 | 2009 | 2010 | 2009 | |||||||||
| (in ‘000s metric tons) | ||||||||||||
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Processing volumes |
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| Oilseeds Processing | 7,834 | 7,799 | 14,909 | 14,172 | ||||||||
| Corn Processing | 5,908 | 4,767 | 11,742 | 9,388 | ||||||||
| Wheat and cocoa | 1,819 | 1,874 | 3,704 | 3,784 | ||||||||
| Total processing volumes | 15,561 | 14,440 | 30,355 | 27,344 | ||||||||
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Quarter ended December 31 |
Six months ended December 31 |
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| 2010 | 2009 | 2010 | 2009 | |||||||||
| (in millions) | ||||||||||||
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Net sales and other operating income |
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| Oilseeds Processing | $ | 6,220 | $ | 4,880 | $ | 12,680 | $ | 11,238 | ||||
| Corn Processing | 2,485 | 2,029 | 4,663 | 3,945 | ||||||||
| Agricultural Services | 10,757 | 7,640 | 17,291 | 12,962 | ||||||||
| Other | 1,468 | 1,364 | 3,095 | 2,689 | ||||||||
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Total net sales and other operating
income |
$ | 20,930 | $ | 15,913 | $ | 37,729 | $ | 30,834 | ||||
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Segment Operating Profit (unaudited) |
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Quarter ended
December 31 |
Six months ended
December 31 |
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| 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||
| Oilseeds Processing Operating Profit | |||||||||||||||||||||||||
| Crushing and origination | $ | 200 | $ | 193 | $ | 7 | $ | 376 | $ | 328 | $ | 48 | |||||||||||||
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Refining, packaging, biodiesel and other |
78 |
76 |
2 |
154 |
146 |
8 |
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| Asia | 47 | 83 | (36 | ) | 103 | 162 | (59 | ) | |||||||||||||||||
| Total Oilseeds Processing | $ | 325 | $ | 352 | $ | (27 | ) | $ | 633 | $ | 636 | $ | (3 | ) | |||||||||||
| Corn Processing Operating Profit | |||||||||||||||||||||||||
| Sweeteners and starches | $ | 119 | $ | 171 | $ | (52 | ) | $ | 265 | $ | 365 | $ | (100 | ) | |||||||||||
| Bioproducts | 280 | 119 | 161 | 475 | 113 | 362 | |||||||||||||||||||
| Total Corn Processing | $ | 399 | $ | 290 | $ | 109 | $ | 740 | $ | 478 | $ | 262 | |||||||||||||
| Agricultural Services Operating Profit | |||||||||||||||||||||||||
| Merchandising and handling | $ | 376 | $ | 103 | $ | 273 | $ | 479 | $ | 260 | $ | 219 | |||||||||||||
| Transportation | 50 | 47 | 3 | 79 | 65 | 14 | |||||||||||||||||||
| Total Agricultural Services | $ | 426 | $ | 150 | $ | 276 | $ | 558 | $ | 325 | $ | 233 | |||||||||||||
| Other Operating Profit | |||||||||||||||||||||||||
| Processing | $ | 160 | $ | 159 | $ | 1 | $ | 186 | $ | 266 | $ | (80 | ) | ||||||||||||
| Financial | 52 | 19 | 33 | 10 | 39 | (29 | ) | ||||||||||||||||||
| Total Other | $ | 212 | $ | 178 | $ | 34 | $ | 196 | $ | 305 | $ | (109 | ) | ||||||||||||
| Corporate Results | |||||||||||||||||||||||||
| LIFO credit (charge) | $ | (254 | ) | $ | (54 | ) | $ | (200 | ) | $ | (377 | ) | $ | 22 | $ | (399 | ) | ||||||||
| Interest expense - net | (83 | ) | (71 | ) | (12 | ) | (172 | ) | (136 | ) | (36 | ) | |||||||||||||
| Corporate costs | (66 | ) | (70 | ) | 4 | (139 | ) | (139 | ) | – | |||||||||||||||
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Unrealized gains on interest rate swaps |
55 |
– |
55 |
24 |
– |
24 |
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| Other | (16 | ) | 9 | (25 | ) | (3 | ) | 10 | (13 | ) | |||||||||||||||
| Total Corporate | $ | (364 | ) | $ | (186 | ) | $ | (178 | ) | $ | (667 | ) | $ | (243 | ) | $ | (424 | ) | |||||||
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Consolidated Statements of Earnings (unaudited) |
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Quarter ended December 31 |
Six months ended December 31 |
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| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||
| Net sales and other operating income | $ | 20,930 | $ | 15,913 | $ | 37,729 | $ | 30,834 | ||||||||
| Cost of products sold | 19,696 | 14,860 | 35,687 | 28,808 | ||||||||||||
| Gross profit | 1,234 | 1,053 | 2,042 | 2,026 | ||||||||||||
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Selling, general and administrative expenses |
412 | 358 | 793 | 712 | ||||||||||||
| Other (income) expense – net | (176 | ) | (89 | ) | (211 | ) | (187 | ) | ||||||||
| Earnings before income taxes | 998 | 784 | 1,460 | 1,501 | ||||||||||||
| Income taxes | (269 | ) | (223 | ) | (389 | ) | (443 | ) | ||||||||
| Net earnings including noncontrolling interests | 729 | 561 | 1,071 | 1,058 | ||||||||||||
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Less: Net earnings (losses) attributable to noncontrolling interests |
(3 | ) | (6 | ) | (6 | ) | (5 | ) | ||||||||
| Net earnings attributable to ADM | $ | 732 | $ | 567 | $ | 1,077 | $ | 1,063 | ||||||||
| Diluted earnings per common share | $ | 1.14 | $ | 0.88 | $ | 1.68 | $ | 1.65 | ||||||||
| Average number of shares outstanding | 641 | 645 | 641 | 644 | ||||||||||||
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Other (income) expense - net consists of: |
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| Interest expense | $ | 115 | $ | 105 | $ | 232 | $ | 203 | ||||||||
| Investment income | (41 | ) | (36 | ) | (65 | ) | (66 | ) | ||||||||
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Gain related to Golden Peanut acquisition |
(71 | ) |
– |
(71 |
) |
– |
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Equity in (earnings) losses of unconsolidated affiliates |
(138 | ) |
(139 |
) |
(263 |
) |
(291 |
) |
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| Unrealized gains on interest rate swaps | (55 | ) | – | (24 | ) | – | ||||||||||
| Other – net | 14 | (19 | ) | (20 | ) | (33 | ) | |||||||||
| $ | (176 | ) | $ | (89 | ) | $ | (211 | ) | $ | (187 | ) | |||||
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Summary of Financial Condition (unaudited) |
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December 31 |
June 30 |
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| (in millions) | |||||
| NET INVESTMENT IN | |||||
| Working capital | $ | 16,131 | $ | 10,279 | |
| Property, plant, and equipment | 9,194 | 8,712 | |||
| Investments in and advances to affiliates | 2,975 | 2,799 | |||
| Long-term marketable securities | 823 | 678 | |||
| Other non-current assets | 1,261 | 1,225 | |||
| $ | 30,384 | $ | 23,693 | ||
| FINANCED BY | |||||
| Short-term debt | $ | 5,632 | $ | 374 | |
| Long-term debt, including current maturities | 7,053 | 7,174 | |||
| Deferred liabilities | 1,795 | 1,514 | |||
| Shareholders’ equity | 15,904 | 14,631 | |||
| $ | 30,384 | $ | 23,693 | ||
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Summary of Cash Flows |
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| Six Months Ended | |||||||
| December 31 | |||||||
| 2010 | 2009 | ||||||
| (in millions) | |||||||
| Operating Activities | |||||||
| Net earnings | $ | 1,071 | $ | 1,058 | |||
| Depreciation and amortization | 463 | 431 | |||||
| Other – net | (24 | ) | 171 | ||||
| Changes in operating assets and liabilities | (5,593 | ) | (280 | ) | |||
| Total Operating Activities | (4,083 | ) | 1,380 | ||||
| Investing Activities | |||||||
| Purchases of property, plant and equipment | (645 | ) | (939 | ) | |||
| Net assets of businesses acquired | (163 | ) | (57 | ) | |||
| Other investing activities | (333 | ) | 216 | ||||
| Total Investing Activities | (1,141 | ) | (780 | ) | |||
| Financing Activities | |||||||
| Long-term debt borrowings | 35 | 10 | |||||
| Long-term debt payments | (237 | ) | (36 | ) | |||
| Net borrowings (payments) under lines of credit | 5,179 | (140 | ) | ||||
| Purchases of treasury stock | (86 | ) | – | ||||
| Cash dividends | (192 | ) | (180 | ) | |||
| Other | 5 | 8 | |||||
| Total Financing Activities | 4,704 | (338 | ) | ||||
| Increase (decrease) in cash and cash equivalents | (520 | ) | 262 | ||||
| Cash and cash equivalents - beginning of period | 1,046 | 1,055 | |||||
| Cash and cash equivalents - end of period | $ | 526 | $ | 1,317 | |||