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Archer Daniels Midland Reports Second Quarter Results
DECATUR, Ill., Feb. 4 /PRNewswire-FirstCall/ -- Archer Daniels Midland (NYSE: ADM)
-- Net earnings for the quarter ended December 31, 2007 increased 7 %
to $ 473 million - $ .73 per share from $ 441 million - $ .67 per
share last year.
"ADM's record earnings for the second quarter and first half of
fiscal 2008 demonstrate the value created by and the strengths of
our broadly diversified asset base and product portfolio," said
Patricia Woertz, chairman and CEO. "This quarter, heightened demand,
coupled with geographic crop imbalances, drove volumes, prices and
volatility in many key markets. Our team's skill in managing both
risk and rapidly changing market opportunities, enabled us to
deliver outstanding value for our shareholders."
-- Second quarter segment operating profit increased 25 % to
$ 955 million from $ 767 million last year.
* Oilseeds Processing operating profit increased on improved
margin conditions due to strong protein and oil demand.
* Corn Processing operating profit decreased due to lower ethanol
selling prices and increased net corn costs.
* Agricultural Services operating profit increased due to improved
global grain merchandising and handling results.
* Other segment operating profit increased primarily due to
improved results of wheat and malt processing operations and
increased financial services income.
-- Financial Highlights
(Amounts in millions, except per share data and percentages)
Three Months Ended Six Months Ended
December 31, December 31,
2007 2006 %Change 2007 2006 %Change
Net sales and
other operating
income $16,496 $10,976 50% $29,324 $20,423 44%
Segment
operating profit $955 $767 25% $1,752 $1,415 24%
Net earnings $473 $441 7% $913 $844 8%
Earnings per
share $0.73 $0.67 9% $1.41 $1.28 10%
Average number of
shares outstanding 646 661 (2)% 646 661 (2)%
Discussion of Operations Net sales and other operating income increased 50 % to $ 16.5 billion. Increased selling prices resulting from sharp rises in commodity prices accounted for approximately 78 % of the increase while higher sales volumes, principally feed grains, ethanol and wheat, accounted for the remaining 22 % increase. A summary of operating profit and net earnings is as follows:
Three months ended Six months ended
December 31, December 31,
2007 2006 Inc(Dec) 2007 2006 Inc(Dec)
(in millions)
Oilseeds Processing $219 $192 $27 $428 $362 $66
Corn Processing 275 336 (61) 528 625 (97)
Agricultural Services 315 131 184 544 246 298
Other 146 108 38 252 182 70
Segment operating
profit 955 767 188 1,752 1,415 337
Corporate (270) (138) (132) (421) (211) (210)
Earnings before
income taxes 685 629 56 1,331 1,204 127
Income taxes (212) (188) (24) (418) (360) (58)
Net earnings $473 $441 $32 $913 $844 $69
Net earnings increased $ 32 million for the quarter and $ 69 million for the six months due principally to increased segment operating profit of $ 188 million for the quarter and $ 337 million for the six months partially offset by increased corporate charges related principally to LIFO inventory valuations. In addition, income taxes increased due primarily to increased pretax earnings and to a higher effective tax rate resulting from changes in the geographic mix of earnings.
Oilseeds Processing
Operating profits consist of earnings from:
Three months ended Six months ended
December 31, December 31,
2007 2006 Inc(Dec) 2007 2006 Inc(Dec)
(in millions)
Crushing and origination $141 $129 $12 $272 $233 $39
Refining, packaging,
biodiesel and other 46 53 (7) 108 102 6
Asia 32 10 22 48 27 21
Total Oilseeds
Processing $219 $192 $27 $428 $362 $66
Oilseeds Processing operating profit increased $ 27 million for the quarter and $ 66 million for the six months due principally to strong global demand for protein meal and oil. Worldwide crush volumes increased 2 % for the six months to 14.7 million metric tons. Crushing and origination results increased $ 12 million for the quarter and $ 39 million for the six months due principally to better crush margins in North America and improved origination results in South America partially offset by reduced results of European operations and increased manufacturing costs. Value added refining, packaging, biodiesel and other results for the quarter and six months include asset abandonment charges of $ 15 million and $ 18 million, respectively, compared to $ 2 million in the prior year quarter and six months. Excluding these charges, refining, packaging, biodiesel, and other operating profits increased $ 6 million for the quarter and $ 22 million for the six months principally from improved refining volumes and margins. Asia results increased $ 22 million for the quarter and $ 21 million for the six months reflecting the Company's share of improved operating earnings of Wilmar International Limited.
Corn Processing
Operating profits consist of earnings from:
Three months ended Six months ended
December 31, December 31,
2007 2006 Inc(Dec) 2007 2006 Inc(Dec)
(in millions)
Sweeteners and starches $147 $152 $(5) $311 $271 $40
Bioproducts 128 184 (56) 217 354 (137)
Total Corn Processing $275 $336 $(61) $528 $625 $(97)
Corn Processing operating profit decreased $ 61 million for the quarter and $ 97 million for the six months. Sweeteners and Starches operating profit decreased $ 5 million for the quarter on higher average sweetener and starch selling prices and favorable risk management results, offset by higher net corn and manufacturing costs. For the six months, Sweeteners and Starches operating profit increased $ 40 million due principally to favorable risk management results. Bioproducts results declined $ 56 million for the quarter and $ 137 million for the six months due principally to higher net corn costs and lower ethanol selling prices partially offset by increased ethanol sales volumes and favorable risk management results. In addition, specialty feed results improved on increased selling prices and volumes.
Agricultural Services
Operating profits consist of earnings from:
Three months ended Six months ended
December 31, December 31,
2007 2006 Inc(Dec) 2007 2006 Inc(Dec)
(in millions)
Merchandising and
handling $258 $64 $194 $443 $129 $314
Transportation 57 67 (10) 101 117 (16)
Total Agricultural
Services $315 $131 $184 $544 $246 $298
Agricultural Services results increased $ 184 million for the quarter and $ 298 million for the six months due principally to improved global merchandising and handling results as volatile commodity market conditions, large North American crops and global wheat shortages provided increased margin and volume opportunities. Transportation results declined due principally to lower barge freight rates and increased operating costs.
Other
Operating profits consist of earnings from:
Three months ended Six months ended
December 31, December 31,
2007 2006 Inc(Dec) 2007 2006 Inc(Dec)
(in millions)
Wheat, cocoa and malt $78 $50 $28 $116 $93 $23
Financial 68 58 10 136 89 47
Total Other $146 $108 $38 $252 $182 $70
Other operating profit increased $ 38 million for the quarter and $ 70 million for the six months. Wheat, Cocoa and Malt operations improved $ 28 million for the quarter and $ 23 million for the six months due principally to improved wheat and malt processing operating efficiencies and margins partially offset by lower cocoa press margins. Financial earnings improved $ 10 million for the quarter and $ 47 million for the six months principally due to marketable security gains of the Company's brokerage services business, and income from private equity fund investments.
Corporate
Corporate results consist of the following:
Three months ended Six months ended
December 31, December 31,
2007 2006 Inc(Dec) 2007 2006 Inc(Dec)
(in millions)
LIFO (charge) $(225) $(107) $(118) $(307) $(124) $(183)
Investment income 38 23 15 81 41 40
Corporate costs (60) (49) (11) (150) (119) (31)
Other (23) (5) (18) (45) (9) (36)
Total Corporate $(270) $(138) $(132) $(421) $(211) $(210)
Conference Call Information Archer Daniels Midland Company will host a conference call and audio Web cast at 8:00 a.m. Central Time on Monday, February 4, 2008 to discuss financial results and provide a Company update. In addition, a financial summary slide presentation will be available to download approximately 60 minutes prior to the start of the call. To listen to the call via the Internet or to download the slide presentation, go to: http://www.admworld.com/webcast. To listen by phone, dial 866-202-4367 or 617-213-8845; the access code is 54749621. Replay of the call will be available beginning on February 4, 2008, at 11:00 a.m. Central Time and ending February 11, 2008. To listen to the replay by telephone, dial 888-286-8010 or 617-801-6888; the access code is: 48905000. To listen to the replay online, visit http://www.admworld.com/webcast. Archer Daniels Midland Company (ADM) is the world leader in BioEnergy and has a premier position in the agricultural processing value chain. ADM is one of the world's largest processors of soybeans, corn, wheat and cocoa. ADM is a leading manufacturer of biodiesel, ethanol, soybean oil and meal, corn sweeteners, flour and other value-added food and feed ingredients. Headquartered in Decatur, Illinois, ADM has over 27,000 employees, more than 240 processing plants and net sales for the fiscal year ended June 30, 2007 of $44 billion. Additional information can be found on ADM's Web site at http://www.admworld.com.
(Financial Tables Follow)
Archer Daniels Midland Company
Consolidated Statements of Earnings
(unaudited)
Three months ended Six months ended
December 31, December 31,
2007 2006 2007 2006
(in millions, except per share amounts)
Net sales and other operating
income $16,496 $10,976 $29,324 $20,423
Cost of products sold 15,548 10,068 27,446 18,650
Gross profit 948 908 1,878 1,773
Selling, general and
administrative expenses 338 298 693 608
Other (income) expense - net (75) (19) (146) (39)
Earnings before income taxes 685 629 1,331 1,204
Income taxes 212 188 418 360
Net earnings $473 $441 $913 $844
Diluted earnings per common
share $.73 $.67 $1.41 $1.28
Average number of shares
outstanding 646 661 646 661
Other (income) expense - net
consists of:
Interest expense $113 $111 $201 $208
Investment income (69) (65) (132) (125)
Net gain on marketable
securities transactions (13) (6) (27) (11)
Equity in earnings of
unconsolidated affiliates (124) (66) (210) (123)
Other - net 18 7 22 12
$(75) $(19) $(146) $(39)
Operating profit by segment
is as follows:
Oilseeds Processing (1) $219 $192 $428 $362
Corn Processing (3) 275 336 528 625
Agricultural Services 315 131 544 246
Other (3) 146 108 252 182
Total segment operating
profit 955 767 1,752 1,415
Corporate (2) (3) (270) (138) (421) (211)
Earnings before income taxes $685 $629 $1,331 $1,204
(1) Includes charges for abandonments and write down of long-lived assets
of $15 million for the quarter and $ 18 million for the six months
ended December 31, 2007. Includes charges for abandonments of
$ 2 million for the quarter and six months ended December 31, 2006.
(2) Includes LIFO charge of $ 225 million for the quarter and
$ 307 million for the six months ended December 31, 2007. Includes
LIFO charge of $ 107 million for the quarter and $ 124 million for
the six months ended December 31, 2006.
(3) Includes an organizational realignment charge of $23 million for the
six months ended December 31, 2007.
Archer Daniels Midland Company
Summary of Financial Condition
(unaudited)
December 31, June 30,
2007 2007
(in millions)
NET INVESTMENT IN
Working capital $12,694 $7,787
Property, plant, and equipment 6,574 6,010
Investments in and advances to affiliates 2,736 2,498
Long-term marketable securities 679 657
Other non-current assets 841 831
$23,524 $17,783
FINANCED BY
Short-term debt $4,536 $468
Long-term debt, including current
maturities 5,292 4,817
Deferred liabilities 1,372 1,245
Shareholders' equity 12,324 11,253
$23,524 $17,783
SUMMARY OF CASH FLOWS
(unaudited)
Six Months Ended
December 31,
2007 2006
(in millions)
Operating Activities
Net earnings $913 $844
Depreciation and asset abandonments 380 346
Other - net 72 61
Changes in operating assets and liabilities (4,291) (1,547)
Total Operating Activities (2,926) (296)
Investing Activities
Purchases of property, plant and equipment (896) (560)
Net assets of businesses acquired (10) (55)
Other investing activities (40) (204)
Total Investing Activities (946) (819)
Financing Activities
Long-term debt borrowings 515 15
Long-term debt payments (49) (130)
Net borrowings under lines of credit 4,042 1,180
Purchases of treasury stock (61) (136)
Cash dividends (148) (131)
Proceeds from exercises of stock options 15 27
Total Financing Activities 4,314 825
Increase (decrease) in cash and cash
equivalents 442 (290)
Cash and cash equivalents - beginning
of period 663 1,113
Cash and cash equivalents - end of period $1,105 $823
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