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ADM Reports First-Quarter Earnings of $ 345 Million

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  Published in House and Home on Tuesday, November 2nd 2010 at 17:45 GMT by Market Wire
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DECATUR, Ill.--([ BUSINESS WIRE ])--Archer Daniels Midland Company (NYSE: ADM) today reported net earnings of $ 345 million and segment operating profit of $ 765 million for the quarter ended September 30, 2010, down $ 151 million and $ 9 million, respectively, from the same period one year earlier.

"The ADM team performed solidly in both corn and oilseeds with both businesses well positioned to meet demand. Agricultural Services results were impacted by crop supply shifts early in the quarter"

• ADM earned $ 0.54 diluted EPS for the first quarter, versus last yeara™s $ 0.77 first quarter.
• Profit in ADMa™s Oilseeds Processing segment increased $ 24 million on strong results across the value chain.
• Corn Processing profit increased $ 153 million as ethanol margins and volumes improved.
• In the Agricultural Services segment, profit fell $ 43 million driven by shifts in crop supplies early in the quarter.
• Other business units posted a loss, reflecting increased captive insurance loss provisions.

aThe ADM team performed solidly in both corn and oilseeds with both businesses well positioned to meet demand. Agricultural Services results were impacted by crop supply shifts early in the quarter,a said Chairman of the Board and Chief Executive Officer Patricia Woertz. aAs we look at markets today, global demand is generally strong. This presents ADM with the opportunity to grow shareholder value by doing what we do best: use our assets and our acumen to connect crops from regions where theya™re available to markets where theya™re needed.a

Financial Highlights

A summary of segment operating profit and net earnings follows:

Discussion of Operations

Net earnings for the first quarter decreased $ 151 million due primarily to a $ 9 million pretax decrease in segment operating profit and a $ 124 million after-tax negative variance from changing LIFO inventory valuations. The companya™s effective income tax rate for the quarter was 26 percent, compared to 31 percent for the prior first quarter, mostly due to changes in the geographic mix of earnings.

Oilseeds Processing Operating Profit

Oilseeds operating profit increased $ 24 million for the quarter, to a profit of $ 308 million.

Crushing and origination results increased $ 41 million to $ 176 million for the quarter. Crushing volumes increased more than 6 percent over the year-ago quarter, though volumes decreased sequentially. Margins improved overall. North American margins benefitted from good raw-material positioning; South America gained from better origination margins and strong fertilizer results in advance of the planting season; and Europe saw strong softseed margins.

Refining, packaging, biodiesel and other results increased $ 6 million to $ 76 million for the quarter. South American biodiesel continued to improve, driving good margins and volumes in that business.

Oilseeds results in Asia were $ 56 million for the quarter, principally reflecting ADMa™s share of the results of its equity investee, Wilmar International Limited.

Corn Processing Operating Profit

For the quarter, corn processing results increased $ 153 million to a profit of $ 341 million. Corn processing volumes were up, reflecting the capacity of the companya™s new dry mills.

Sweeteners and starches operating profit decreased $ 48 million from the prior year to $ 146 million. This decrease reflects lower average selling prices that were only partially offset by lower net corn costs. Sales volumes were up due to strong export shipments and improved domestic demand for industrial starches.

Bioproducts profit in the quarter was up significantly from last yeara™s loss on improved ethanol and lysine margins, a favorable corn ownership position and increased ethanol sales volumes. In the quarter, bioproducts recorded $ 32 million in costs related to the start up of new plants.

Agricultural Services Operating Profit

Agricultural Services results were $ 132 million, $ 43 million below the year-ago quarter.

Merchandising and Handling profit decreased over last year, due primarily to negative impacts from supply shifts early in the quarter as a result of drought conditions and government actions in the Black Sea region. These negative impacts were only partially offset by a $ 67 million insurance settlement related to ADMa™s Destrehan, La., export elevator and by increased volumes driven by the early U.S. harvest. Earnings from transportation operations improved on higher barge-freight rates and volumes which were also driven by the early U.S. harvest.

Other Operating Profit

In the first quarter, ADMa™s Other business units showed a loss of $ 16 million, compared to the year-ago profit of $ 127 million.

Other processing results decreased $ 81 million, with improved results in wheat milling more than offset by lower results in ADMa™s cocoa operations and lower results from equity investee, Gruma S.A.B. de C.V. Other processing earnings for the quarter included mark-to-market losses of $ 59 milliona"compared to gains of $ 17 million in last yeara™s first quartera"related to certain forward purchase and sales commitments accounted for as derivatives.

Other financial results fell $ 62 million, primarily due to higher captive insurance loss provisions, principally related to ADMa™s Destrehan, La., settlement. The company is in the process of working with its reinsurers and expects to recover a significant part of these losses over the next 12 months.

Corporate Results

Corporate results decreased $ 246 million for the quarter. Rising commodity prices generated a $ 123 million increase in ADMa™s LIFO inventory valuation reserves this quarter, compared to a $ 76 million decrease a year ago. Corporate unallocated interest expense increased $ 55 million, including $ 31 million of unrealized losses on interest rate swaps and the impact of lower capitalized interest on construction projects.

Conference Call Information

ADM will host a conference call and audio webcast at 8 a.m. Central Time on Tuesday, Nov. 2, 2010, 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 866-770-7120 or 617-213-8065; the access code is 76278625. Replay of the call will be available from 11 a.m. Central Time on Nov. 2 to Nov. 9, 2010. To listen to the replay by telephone, dial 888-286-8010 or 617-801-6888; the access code is 37728490. 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 worlda™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 ].