ADM Reports First Quarter 2012.5 Results

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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 ethanol margins


DECATUR, Ill.--(BUSINESS WIRE)-- Archer Daniels Midland Company (NYS: 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 share1 were $0.50, primarily reflecting a $0.16 charge related to ADM's planned divestment of Gruma. Segment operating profit1 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 the world."

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 starches.
  • 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 schedule.

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 improved significantly.

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 impacts.

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 Services.

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 31529634.

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.

About ADM

For more than a century, the people of Archer Daniels Midland Company (NYS: 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, visit www.adm.com.

 
 
Segment Operating Profit and Corporate Results((1))

A non-GAAP financial measure (unaudited)

 
  Quarter ended
September 30 
2012  

2011(1)

  Change
(In millions)
Oilseeds Processing Operating Profit    
Crushing and origination$256$106$150
Refining, packaging, biodiesel

and other

28

55

(27

)

Cocoa and other29227
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)
Transportation1928(9)
Milling and other (excl. charges)978611
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)
 
Corporate Results
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

(unaudited)

 
  Quarter ended
September 30
2012  2011
(In millions, except per share amounts)
  
Net sales and other operating income$21,808$21,902
Cost of products sold 21,002  20,868 
Gross profit8061,034
Selling, general and administrative expenses(390)(407)
Asset impairment charge(146)-

Equity in earnings of unconsolidated affiliates

113124
Investment income3040
Interest expense(106)(113)
Other income (expense) - net (12) (18)
Earnings before income taxes295660
Income taxes (111) (199)
Net earnings including noncontrolling interests184461
Less: Net earnings (losses) attributable to noncontrolling interests 2  1 
Net earnings attributable to ADM$182 $460 
 
Diluted earnings per common share$0.28 $0.68 
 
Average number of shares outstanding 661  674 
 
 

Other income (expense) - net consists of:

Net gain on marketable securities transactions

$2$5
Debt buyback/exchange costs-(12)
Other - net (14) (11)
$(12)$(18)
 
 
Summary of Financial Condition

(unaudited)

 
September 30,    June 30,
2012     2012
(in millions)
NET INVESTMENT IN
Working capital$16,538$16,113
Property, plant, and equipment9,8839,812
Investments in and advances to affiliates3,3793,388
Long-term marketable securities246262
Other non-current assets 1,098   1,137
$31,144$  30,712
 
FINANCED BY
Short-term debt$3,678$2,108
Long-term debt, including current maturities6,8158,212
Deferred liabilities2,2102,223
Shareholders' equity 18,441   18,169
$31,144$  30,712
 
 
Summary of Cash Flows
(unaudited)
  
Three Months Ended
September 30
2012   2011
(in millions)
Operating Activities  
Net earnings$184$461
Depreciation and amortization217207
Asset impairment charge146-
Other - net111114
Changes in operating assets and liabilities (175) 1,305 
Total Operating Activities4832,087
 

Investing Activities

Purchases of property, plant and equipment(252)(443)
Net assets of businesses acquired(21 Read Full Story

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