ADM Reports Second Quarter 2013 Earnings of $223 Million or $0.34 per Share

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ADM Reports Second Quarter 2013 Earnings of $223 Million or $0.34 per Share

Adjusted EPS of $0.46, up 21 percent from year-ago quarter

DECATUR, Ill.--(BUSINESS WIRE)-- Archer Daniels Midland Company (NYS: ADM) today reported financial results for the quarter ended June 30, 2013. The company reported net earnings for the quarter of $223 million, or $0.34 per share, down from $0.43 per share in the same period one year earlier. Adjusted earnings per share1 were $0.46, up from $0.38 in the same period last year. Segment operating profit1 was $647 million, up 19 percent from the prior year.


"The team managed well through this period, as tight U.S. crop supplies reduced volumes," said ADM Chairman and CEO Patricia Woertz. "Also, corn results improved amid volatile ethanol industry conditions.

"During the quarter, we continued our work to improve the company's future returns and earnings power over the cycle. Our effort to unlock cash reached $2 billion, with the team reaching this milestone a half-year ahead of schedule. And, in cost, we made solid progress toward our goal of $200 million in additional cost reductions by the end of 2014.

"Looking ahead, we'll be managing through tight crop supplies until the forecast large but delayed U.S. harvest."

Second Quarter 2013 Highlights

  • Adjusted EPS of $0.46 excludes approximately $39 million in pretax LIFO charges, or $0.04 per share; $51 million, or $0.05 per share, in foreign-currency hedging losses related to the GrainCorp acquisition; and $29 million, or $0.03 per share, of additional provisions related to the previously disclosed FCPA matter.
  • Oilseeds Processing profit decreased $10 million as solid performance in crushing and origination was offset by weaker cocoa results.
  • Corn Processing profit increased $149 million due to improved ethanol results.
  • Agricultural Services profit decreased $42 million amid expected lower U.S. origination volumes as well as weaker international merchandising results.
  • ADM's net debt position fell to $5.5 billion, down from $8.9 billion a year ago, as ADM's focus on capital efficiency further strengthened the balance sheet.

Adjusted EPS of 46 Cents, up 8 Cents

Adjusted EPS increased primarily due to higher segment operating profit.

This quarter's effective tax rate of 29 percent was below the 30 percent rate during the same period last year.

Oilseeds Earnings Essentially Flat as Stronger Crushing and Origination Profits Were Offset by Lower Cocoa Results

Oilseeds operating profit in the second quarter was $321 million, similar to the same period one year earlier.

Crushing and origination operating profit was $185 million, up $35 million from the year-ago quarter. European crushing results improved significantly year-over-year as delays in the arrival of South American meal contributed to stronger margins. In North America, tighter crop supplies resulted in weaker soy and softseed crush margins. South American operations recovered from the first quarter and generated strong overall results, equivalent to the year-ago quarter.

Refining, packaging, biodiesel and other generated a profit of $93 million for the quarter, up $9 million on stronger European results.

Cocoa and other results decreased $58 million due to lower margins on business contracted in earlier quarters.

Oilseeds results in Asia for the quarter were up $4 million from the same period last year, principally reflecting ADM's share of the improved results from Wilmar International Limited.

Corn Processing Results Reflect Improved Ethanol Conditions

Corn processing operating profit of $223 million represented an increase of $149 million from the same period one year earlier.

Sweeteners and starches operating profit decreased $9 million to $126 million. Excluding the impact of corn hedge ineffectiveness, sweeteners and starches results improved by $25 million, with overall demand and margins remaining solid.

Bioproducts results increased $158 million to $97 million. Overall ethanol margins were profitable, albeit volatile.

Agricultural Services Impacted by Lower U.S. Volumes and Weaker International Merchandising Results

Agricultural Services operating profit was $81 million, down $42 million from the same period one year earlier.

Merchandising and handling earnings declined $16 million to $14 million, due to smaller U.S. origination and export volumes, and lower margins in international merchandising.

Transportation results decreased $14 million to $3 million as lower U.S. export volumes reduced barge freight utilization.

Milling and other results remained steady, excluding Gruma, as the milling business continued to perform well.

Provision for FCPA Matter

ADM has been in discussions with the U.S. Department of Justice and the U.S. Securities and Exchange Commission regarding a previously disclosed FCPA matter dating back to 2008 and earlier. Based upon recent progress in these discussions, ADM believes it is appropriate to increase its provision to $54 million, a $29 million increase over the $25 million established in the first quarter.

Conference Call Information

ADM will host a conference call and audio webcast Tuesday, Aug. 6, 2013, 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 16833630.

Replay of the call will be available from Aug. 7, 2013, to Aug. 13, 2013. 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 16833630. The replay will also be available online for an extended period of time at 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 265 processing plants, 460 crop procurement facilities, and the world's premier crop transportation network, ADM helps connect the harvest to the home in more than 140 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

Financial Tables Follow

     
Segment Operating Profit and Corporate Results

A non-GAAP financial measure (unaudited)

 
Quarter endedSix months ended
June 30  June 30  
2013 2012 Change2013 2012 Change
(in millions)
Oilseeds Processing Operating Profit  
Crushing and origination$185$150$35$341$414($73)
Refining, packaging, biodiesel, and other9384920116338
Cocoa and other(6)52(58)(28)211(239)
Asia 49  45  4  120  85  35 
Total Oilseeds Processing$321 $331  ($10)$634 $873  ($239)
 
Corn Processing Operating Profit
Sweeteners and starches$126$135($9)$202$230($28)
Bioproducts (excluding charges)97(61)158174(13)187
Restructuring and exit costs 0  0  0  0  (10) 10 
Total Corn Processing$223 $74 $149 $376 $207 $169 
 
Agricultural Services Operating Profit
Merchandising and handling$14$30($16)$100$178($78)
Milling and other6476(12)123162(39)
Transportation 3  17  (14) 9  44  (35)
Total Agricultural Services$81 $123  ($42)$232 $384  ($152)
 
Other Operating Profit
Financial$22 $16 $6 $35  ($2)$37 
Total Other$22 $16 $6 $35  ($2)$37 
 
Segment Operating Profit$647$544$103$1,277$1,462($185)
 
Corporate Results
LIFO credit (charge)($39)$50($89)($73)($57)($16)
Interest expense - net(104)(112)8(209)(226)17
Corporate costs(71)(67)(4)(153)(134)(19)
Employee-related exit costs0000(71)71
Loss on Australian foreign exchange hedges(51)0(51)(51)0(51)
Other (65) 1  (66) (99) 10  (109)
Total Corporate ($330) ($128) ($202) ($585) ($478) ($107)
 
Earnings Before Income Taxes$317 $416  ($99)$692 $984  ($292)

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.

   
Consolidated Statements of Earnings

(unaudited)

 
Quarter endedSix months ended
June 30June 30
2013 20122013 2012
(in millions, except per share amounts)
  
Net sales and other operating income$22,541$22,675$44,268$43,830
Cost of products sold 21,734  21,862  42,705  42,009 
Gross profit8078131,5631,821
Selling, general, and administrative expenses452394888796
Asset impairment charges and exit costs00085
Equity in (earnings) losses of unconsolidated affiliates(62)(106)(199)(221)
Interest income(29)(24)(56)(50)
Interest expense107116213232
Other (income) expense - net 22  17  25  (5)
Earnings before income taxes317416692984
Income taxes (91) (123) (196) (286)
Net earnings including noncontrolling interests226293496698
Less: Net earnings (losses) attributable to noncontrolling

interests

 3  9  4  15 
Net earnings attributable to ADM$ Read Full Story

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