ARCHER DANIELS MIDLAND REPORTS RECORD FIRST QUARTER RESULTS
Company’s strong financial condition, global network enhance ability to act on opportunities
Archer Daniels Midland Company (NYSE: ADM) today announced record quarterly net earnings of $ 1.05 billion for the quarter ended September 30, 2008, up 138 % from the period a year ago. Net sales increased 65 % to $ 21.16 billion.
“This record quarter again demonstrates the ability of our people to utilize our integrated global network and financial strength to capitalize on opportunities and further affirms our business model and strategy,” said Chairman of the Board and Chief Executive Officer Patricia Woertz. “Our strong balance sheet and credit rating provide us with the flexibility to access the most cost-efficient credit markets. Our market acumen coupled with this financial strength enables us to recognize and promptly act upon opportunities when they arise.”
| ► | Net earnings for the quarter ended September 30, 2008 increased 138 % to $ 1.05 billion - $ 1.63 per share from $ 441 million - $ .68 per share last year. |
| ► | Net sales and other operating income increased 65 % to $ 21.16 billion for the quarter ended September 30, 2008, due principally to higher average selling prices resulting primarily from year-over-year increases in underlying commodity costs. |
| ► | Segment operating profit for the quarter increased 48 % to $ 1.18 billion from $ 797 million last year. |
| ● | | Oilseeds Processing operating profit increased on improved global crushing and origination margins, improved margins for value-added products and increased equity earnings of our Asian affiliates. |
| ● | | Corn Processing operating profit decreased due principally to sharply higher net corn and energy costs partially offset by increased sales volumes and average selling prices for sweeteners and starches, ethanol and lysine. |
| ● | | Agricultural Services operating profit increased due principally to improved margins resulting from opportunities created by market volatility, global shifts in sources of grain supplies and the delayed US harvest. |
| ● | | Other operating profit increased due principally to improved cocoa processing volumes and margins and improved wheat processing margins. |
Archer Daniels Midland Company
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► Financial Highlights
| (Amounts in millions, except per share data and percentages) | | | | | |
| | | | | | |
| | | THREE MONTHS ENDED | | | |
| | | 9/30/2008 | | | 9/30/2007 | | | % CHANGE | |
| Net sales and other operating income | | $ | 21,160 | | | $ | 12,828 | | | | 65% | |
| Segment operating profit | | $ | 1,176 | | | $ | 797 | | | | 48% | |
| Net earnings | | $ | 1,050 | | | $ | 441 | | | | 138% | |
| Earnings per share | | $ | 1.63 | | | $ | .68 | | | | 140% | |
| Average number of shares outstanding | | | 645 | | | | 647 | | | | – | |
Discussion of Operations
Net sales and other operating income increased 65 % to $ 21.16 billion due principally to higher selling prices resulting primarily from sharp rises in underlying commodity costs and, to a lesser extent, foreign exchange translation impacts. Sales volumes were comparable.
A summary of first quarter segment operating profit and net earnings is as follows:
| | | Three months ended | | | | |
| | | September 30 | | | | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| Oilseeds Processing | | $ | 510 | | | $ | 209 | | | $ | 301 | |
| Corn Processing | | | 118 | | | | 253 | | | | (135 | ) |
| Agricultural Services | | | 428 | | | | 229 | | | | 199 | |
| Other | | | 120 | | | | 106 | | | | 14 | |
| Segment operating profit | | | 1,176 | | | | 797 | | | | 379 | |
| Corporate | | | 318 | | | | (150 | ) | | | 468 | |
| Earnings before income taxes | | | 1,494 | | | | 647 | | | | 847 | |
| Income taxes | | | (444 | ) | | | (206 | ) | | | (238 | ) |
| Net earnings | | $ | 1,050 | | | $ | 441 | | | $ | 609 | |
Net earnings increased $ 609 million due principally to a $ 379 million increase in segment operating profit and from the positive impact on Corporate results of the change in LIFO inventory valuations. In addition, income taxes increased due principally to increased pretax earnings, partially offset by a decreased effective tax rate resulting from changes in the geographic mix of pretax earnings.
Archer Daniels Midland Company
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Oilseeds Processing Operating Profit
| | | Three months ended | | | | |
| | | September 30 | | | | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| Crushing and origination | | $ | 339 | | | $ | 131 | | | $ | 208 | |
| Refining, packaging, biodiesel, and other | | | 106 | | | | 62 | | | | 44 | |
| Asia | | | 65 | | | | 16 | | | | 49 | |
| Total Oilseeds Processing | | $ | 510 | | | $ | 209 | | | $ | 301 | |
Oilseeds Processing operating profit increased $ 301 million to $ 510 million from $ 209 million last year. Crushing and origination results increased $ 208 million due principally to improved global crush margins primarily related to favorable raw material positioning. Origination margins increased in Europe and South America and fertilizer results improved in South America due principally to increased sales volumes. Refining, packaging, biodiesel and other results increased $ 44 million due principally to improved refining margins and improved biodiesel margins in Europe and South America. In addition, biodiesel sales volumes in South America increased due to the recently-opened plant in Rondonopolis, Brazil. Asia results increased $ 49 million due principally to increased equity earnings related to our investment in Wilmar International Ltd.
Corn Processing Operating Profit
| | | Three months ended | | | | |
| | | September 30 | | | | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| Sweeteners and starches | | $ | 65 | | | $ | 167 | | | $ | (102 | ) |
| Bioproducts | | | 53 | | | | 86 | | | | (33 | ) |
| Total Corn Processing | | $ | 118 | | | $ | 253 | | | $ | (135 | ) |
Corn Processing operating profit decreased $ 135 million to $ 118 million from $ 253 million last year. Sweeteners and Starches operating profit decreased $ 102 million to $ 65 million due principally to sharply higher net corn and energy costs, partially offset by increased sales volumes and higher average selling prices. Bioproducts operating profit decreased $ 33 million to $ 53 million due principally to higher net corn and energy costs partially offset by higher average selling prices and increased sales volumes for ethanol and lysine. Net corn costs were negatively impacted this quarter by mark-to-market losses on corn futures and options used to economically hedge sales obligations.Archer Daniels Midland Company Page 4
Agricultural Services Operating Profit
| | | Three months ended | | | | |
| | | September 30 | | | | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| Merchandising and handling | | $ | 385 | | | $ | 185 | | | $ | 200 | |
| Transportation | | | 43 | | | | 44 | | | | (1 | ) |
| Total Agricultural Services | | $ | 428 | | | $ | 229 | | | $ | 199 | |
Agricultural Services results increased $ 199 million to $ 428 million due principally to improved global merchandising and handling margins resulting from opportunities created by volatile commodity and freight market conditions, global shifts in the sources of grain supplies and the delayed U.S. harvest. Transportation results were similar as lower barge freight volumes and increased operating costs were partially offset by increased barge freight rates.
Other Operating Profit
| | | Three months ended | | | | |
| | | September 30 | | | | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| Wheat, cocoa and malt | | $ | 103 | | | $ | 38 | | | $ | 65 | |
| Financial | | | 17 | | | | 68 | | | | (51 | ) |
| Total Other | | $ | 120 | | | $ | 106 | | | $ | 14 | |
Other operating profit increased $ 14 million due principally to improved operating margins in wheat and cocoa, higher equity earnings of affiliates and increased sales volumes of cocoa and chocolate products partially offset by decreased interest income from the Company’s brokerage services business and reduced income from the Company’s managed fund investments. Wheat, cocoa and malt includes one-time gains of $ 9 million related to the disposal of the Company’s Malt business.
Corporate Results
| | | Three months ended | | | | |
| | | September 30 | | | | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| LIFO income/(expense) | | $ | 453 | | | $ | (83 | ) | | $ | 536 | |
| Investment income/(expense) | | | (19 | ) | | | 46 | | | | (65 | ) |
| Loss on security transactions | | | (9 | ) | | | (2 | ) | | | (7 | ) |
| Corporate costs | | | (94 | ) | | | (90 | ) | | | (4 | ) |
| Other | | | (13 | ) | | | (21 | ) | | | 8 | |
| Total Corporate | | $ | 318 | | | $ | (150 | ) | | $ | 468 | |
Corporate results increased $ 468 million due principally to a LIFO credit of $ 453 million compared to a LIFO charge of $ 83 million last year. Investment income/(expense) decreased $ 65 million primarily due to increased interest expense. Archer Daniels Midland Company
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Conference Call Information
Archer Daniels Midland Company will host a conference call and audio Web cast at 8:00 a.m. Central Time on Tuesday, November 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: www.admworld.com/webcast. To listen by telephone, dial 800-599-9795 or 617-786-2905; the access code is 35756541. Replay of the call will be available beginning on November 4, 2008, at 10:00 a.m. Central Time and ending November 11, 2008. To listen to the replay by telephone, dial 888-286-8010 or 617-801-6888; the access code is: 14100301. To listen to the replay online, visit www.admworld.com/webcast.
Every day, the 27,000 people of Archer Daniels Midland Company (NYSE: ADM) turn crops into renewable products that meet the demands of a growing world. At more than 230 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, 2008, were $70 billion. For more information about our Company and our products, visit http://www.admworld.com.
| Contacts: | |
| David Weintraub | Dwight Grimestad |
| Director, External Communications | Vice President, Investor Relations |
| 217/424-5413 | 217/424-4586 |
(Financial Tables Follow)
November 4, 2008
Archer Daniels Midland Company
Consolidated Statements of Earnings
(unaudited)
| | | Three months ended | |
| | | September 30 | |
| | | 2008 | | | 2007 | |
| | | (in millions, except per share amounts) | |
| | | | | | | |
| Net sales and other operating income | | $ | 21,160 | | | $ | 12,828 | |
| Cost of products sold | | | 19,293 | | | | 11,898 | |
| Gross profit | | | 1,867 | | | | 930 | |
| Selling, general and administrative expenses | | | 409 | | | | 354 | |
| Other income – net | | | (36 | ) | | | (71 | ) |
| Earnings before income taxes | | | 1,494 | | | | 647 | |
| Income taxes | | | 444 | | | | 206 | |
| Net earnings | | $ | 1,050 | | | $ | 441 | |
| | | | | | | | | |
| Diluted earnings per common share | | $ | 1.63 | | | $ | .68 | |
| Average number of shares outstanding | | | 645 | | | | 647 | |
| | | | | | | | | |
| Other income – net consists of: | | | | | | | | |
| Interest expense | | $ | 129 | | | $ | 88 | |
| Investment income | | | (54 | ) | | | (63 | ) |
| Net gain on marketable securities transactions | | | (9 | ) | | | (15 | ) |
| Equity in earnings of unconsolidated affiliates | | | (123 | ) | | | (85 | ) |
| Other – net | | | 21 | | | | 4 | |
| | | $ | (36 | ) | | $ | (71 | ) |
| | | | | | | | | |
November 4, 2008
Archer Daniels Midland Company
Segment Operating Analysis
(unaudited)
| | | Three months ended | |
| | | September 30 | |
| | | 2008 | | | 2007 | |
| | | (in millions) | |
| Net sales and other operating income | | | | | | |
| Oilseeds Processing | | $ | 7,772 | | | $ | 4,610 | |
| Corn Processing | | | 2,241 | | | | 1,521 | |
| Agricultural Services | | | 9,569 | | | | 5,540 | |
| Other | | | 1,578 | | | | 1,157 | |
| Total net sales and other operating income | | $ | 21,160 | | | $ | 12,828 | |
| | | Three months ended | |
| | | September 30 | |
| | | 2008 | | | 2007 | |
| | | (in millions) | |
| Segment operating profit (loss) | | | | | | |
Oilseeds Processing (1) (4) | | $ | 510 | | | $ | 209 | |
Corn Processing (1) | | | 118 | | | | 253 | |
Agricultural Services (4) | | | 428 | | | | 229 | |
Other (1) (3) (4) | | | 120 | | | | 106 | |
| Total segment operating profit | | | 1,176 | | | | 797 | |
Corporate (2) | | | 318 | | | | (150 | ) |
| Earnings before income taxes | | $ | 1,494 | | | $ | 647 | |
| | | Three months ended | |
| | | September 30 | |
| | | 2008 | | | 2007 | |
| | | (in 000s metric tons) | |
| Processing volumes | | | | | | |
| Oilseeds Processing | | | 7,025 | | | | 7,185 | |
| Corn Processing | | | 4,589 | | | | 4,444 | |
| Wheat, cocoa and malt | | | 1,877 | | | | 2,144 | |
| Total processing volumes | | | 13,491 | | | | 13,773 | |
| (1) | Includes asset impairment charges of $ 3 million, $ 2 million and $ 1 million in Oilseeds, Corn and Other, respectively, for the quarter ended September 30, 2007. There were no asset impairment charges for the quarter ended September 30, 2008. |
| | |
| (2) | Includes realignment charges of $ 23 million for the quarter ended September 30, 2007. There were no realignment charges for the quarter ended September 30, 2008. |
| | |
| (3) | Includes net gains on securities of $ 15 million for the quarter ended September 30, 2007 and $9 million for the quarter ended September 30, 2008. |
| | |
| (4) | Includes gain on asset and business disposals of $ 3 million, $ 2 million and $ 5 million in Oilseeds, Agricultural Services and Other, respectively, for the quarter ended September 30, 2008. |
November 4, 2008
Archer Daniels Midland Company
Summary of Financial Condition
(unaudited)
| | | September 30 2008 | | | June 30 2008 | |
| | | (in millions) | |
| | | | | | | |
| NET INVESTMENT IN | | | | | | |
| Cash, cash equivalents and short-term marketable securities | | $ | 2,985 | | | $ | 1,265 | |
| Working capital (excluding cash, cash equivalents and short-term marketable securities) | | | 8,739 | | | | 12,924 | |
| Property, plant, and equipment | | | 7,155 | | | | 7,125 | |
| Investments in and advances to affiliates | | | 2,752 | | | | 2,773 | |
| Long-term marketable securities | | | 641 | | | | 590 | |
| Other non-current assets | | | 1,085 | | | | 1,113 | |
| | | $ | 23,357 | | | $ | 25,790 | |
| | | | | | | | | |
| FINANCED BY | | | | | | | | |
| Short-term debt | | $ | 707 | | | $ | 3,123 | |
| Long-term debt, including current maturities | | | 7,798 | | | | 7,922 | |
| Deferred liabilities | | | 1,319 | | | | 1,255 | |
| Shareholders' equity | | | 13,533 | | | | 13,490 | |
| | | $ | 23,357 | | | $ | 25,790 | |
| | | | | | | | | |
| Summary of Cash Flows | | | | | | | | |
| (unaudited) | | | | | | | | |
| | | Three Months Ended | |
| | | September 30 | |
| | | 2008 | | | 2007 | |
| | | (in millions) | |
| Operating Activities | | | | | | | | |
| Net earnings | | $ | 1,050 | | | $ | 441 | |
| Depreciation and asset abandonments | | | 177 | | | | 185 | |
| Other – net | | | (74 | ) | | | 17 | |
| Changes in operating assets and liabilities | | | 3,527 | | | | (1,853 | ) |
| Total Operating Activities | | | 4,680 | | | | (1,210 | ) |
| Investing Activities | | | | | | | | |
| Purchases of property, plant and equipment | | | (483 | ) | | | (359 | ) |
| Proceeds from sales of businesses | | | 236 | | | | 8 | |
| Net assets of businesses acquired | | | (24 | ) | | | (5 | ) |
| Other investing activities | | | (28 | ) | | | 132 | |
| Total Investing Activities | | | (299 | ) | | | (224 | ) |
| Financing Activities | | | | | | | | |
| Long-term debt borrowings | | | 102 | | | | 17 | |
| Long-term debt payments | | | (15 | ) | | | (39 | ) |
| Net borrowings under lines of credit | | | (2,570 | ) | | | 2,041 | |
| Purchases of treasury stock | | | (100 | ) | | | (60 | ) |
| Cash dividends | | | (84 | ) | | | (74 | ) |
| Other | | | 8 | | | | 7 | |
| Total Financing Activities | | | (2,659 | ) | | | 1,892 | |
| Increase in cash and cash equivalents | | | 1,722 | | | | 458 | |
| Cash and cash equivalents - beginning of period | | | 810 | | | | 663 | |
| Cash and cash equivalents - end of period | | $ | 2,532 | | | $ | 1,121 | |
