ADM Reports Second Quarter 2012.5 Earnings of $510 Million or $0.77 per Share

ADM Reports Second Quarter 2012.5 Earnings of $510 Million or $0.77 per Share

Adjusted EPS of $0.60, up 18 percent from year-ago quarter

Good operating results despite challenging conditions caused by U.S. drought


DECATUR, Ill.--(BUSINESS WIRE)-- Archer Daniels Midland Company (NYS: ADM) today reported financial results for the quarter ended Dec. 31, 2012. The company reported net earnings for the quarter of $510 million, or $0.77 per share, up from $0.12 per share in the same period one year earlier. Adjusted earnings per share1 were $0.60, up from $0.51 in the same period last year. Segment operating profit1 was $808 million.

"The ADM team managed well despite challenges from the U.S. drought and from persistent, negative margins in the ethanol industry," said ADM Chairman and CEO Patricia Woertz. "Our results in Oilseeds and Agricultural Services demonstrated the ability of our people to use our global asset network to prepare for and manage in a range of market conditions.

"In North America, we fully utilized our oilseeds crushing capacity to meet strong global demand, and we adjusted our transportation and origination network to move goods efficiently despite constrained river traffic and a smaller corn crop. In South America, we leveraged our origination, transportation and export facilities to move the record corn crop to world markets. And, in Europe, we made some operational changes, and the market responded to reduced imports.

"During our abbreviated fiscal year, we drove meaningful improvements in capital, costs and cash to enhance our future competitiveness. We continued taking action to improve underperforming businesses. As part of our ongoing portfolio management, we sold $570 million of non-core investments. And, through a companywide focus, we unlocked more than $1 billion in working cash."

Second Quarter 2012.5 Highlights

  • Adjusted EPS of $0.60 excludes approximately $113 million in pretax LIFO gains ($0.11 per share) and other items that net to about $0.06 per share.
  • Oilseeds Processing profit increased $202 million, with year-over-year improvements in crushing and origination results in all regions.
  • Excluding last year's $339 million asset impairment charge, Corn Processing profit decreased $207 million, due to ongoing weakness in industry ethanol margins.
  • Agricultural Services profit rose $77 million, as solid U.S. soybean exports, improved international merchandising and a gain on ADM's investment in GrainCorp benefitted results.
  • Net debt balances declined to $7.2 billion, the lowest level since June 2010, as the benefits of the company wide focus on unlocking cash began to be realized.

Adjusted EPS of 60 Cents, up 9 Cents

Adjusted EPS increased primarily due to higher segment operating profit.

This fiscal year's effective tax rate of 30 percent was in line with the same six-month period last year.

Oilseeds Earnings Improve Across All Three Regions

Oilseeds operating profit in the second quarter was $411 million, up $202 million from the same period one year earlier. Results included unfavorable mark-to-market timing effects of about $50 million (about $0.05 per share), compared to an unfavorable impact of about $110 million in the year-ago quarter.

Crushing and origination operating profit was $261 million, up $140 million from the year-ago quarter on strong improvements in all three geographies. ADM's U.S. soybean operations ran at record capacity during the quarter and delivered very strong results amid good domestic and export meal demand. In South America, ADM was well prepared to move the record corn harvest. And in Europe, operational changes and reduced imports from South America drove improved results.

Refining, packaging, biodiesel and other generated a profit of $50 million for the quarter, down $27 million, due to weakness in biodiesel margins in the U.S. and Europe.

Cocoa and other results increased $66 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 up $23 million from the prior year's second 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 of $3 million represented a decline of $207 million from the same period one year earlier, when excluding the year-ago quarter's $339 million asset impairment.

Sweeteners and starches operating profit increased $22 million to $97 million, as tight sweetener industry capacity and higher corn costs supported higher year-over-year selling prices.

Excluding last year's $339 million asset impairment charge, bioproducts results decreased $229 million to a loss of $94 million. Weak domestic gasoline demand and unfavorable global ethanol trade flows resulted in continued excess industry capacity, keeping ethanol margins negative.

Agricultural Services Solid Despite Impact of U.S. Drought

Agricultural Services operating profit was $317 million, up $77 million from the same period one year earlier. Results included a $62 million gain on ADM's investment in GrainCorp.

Excluding the gain on GrainCorp, merchandising and handling earnings rose $23 million to $129 million, as solid U.S. soybean exports and improved international merchandising results more than offset lower U.S. corn origination and export volumes.

Transportation results were solid, despite challenges from low water on the Mississippi River. Results decreased $5 million to $48 million as increased barge operating expenses were partially offset by higher freight rates.

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

Other Financial Results Improve

Operating profit from ADM's Other Financial businesses was $77 million, up $55 million, with asset disposal gains and favorable captive insurance loss reserve adjustments.

Conference Call Information

ADM will host a conference call and audio webcast Tuesday, Feb. 5, 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 85998249.

Replay of the call will be available from Feb. 6, 2013 to Feb. 12, 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 85998249. 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 12 for explanations and reconciliations

Financial Tables Follow

   
 
Segment Operating Profit and Corporate Results

A non-GAAP financial measure (unaudited)

    Quarter ended

December 31

        Four quarters ended

December 31

   
2012   2011   Change 2012   2011   Change
(in millions)
Oilseeds Processing Operating Profit  
Crushing and origination $ 261 $ 121 $ 140 $ 931 $ 855 $ 76

Refining, packaging, biodiesel and other

50

77

(27

)

241

315

(74

)

Cocoa and other 36 (30 ) 66 276 88 188
Asia   64     41     23     172     178     (6 )
Total Oilseeds Processing $ 411   $ 209   $ 202   $ 1,620   $ 1,436   $ 184  
 
Corn Processing Operating Profit
Sweeteners and starches $ 97 $ 75 $ 22 $ 421 $ 165 $ 256
Bioproducts (excluding charges) (94 ) 135 (229 ) (133 ) 559 (692 )
Restructuring and Exit Costs   -     (339 )   339     (10 )   (339 )   329  
Total Corn Processing $ 3   $ (129 ) $ 132   $ 278   $ 385   $ (107 )
 
Agricultural Services Operating Profit

Merchandising and handling (excluding item)

$

129

$

106

$

23

$

415

$

654

$

(239

)

Gain on interest in GrainCorp 62 - 62 62 - 62
Transportation 48 53 (5 ) 111 112 (1 )
Milling and other (excluding items) 78 81 (3 ) 337 314 23
Gain on sale of Gruma assets - - - - 78 (78 )
Asset impairment charge   -     -     -     (146 )   -     (146 )
Total Agricultural Services $ 317   $ 240   $ 77   $ 779   $ 1,158   $ (379 )
 
Other Operating Profit
Financial $ 77   $ 22   $ 55   $ 91   $ 46   $ 45  
Total Other $ 77   $ 22   $ 55   $ 91   $ 46   $ 45  
 
Segment Operating Profit $ 808 $ 342 $ 466 $ 2,768 $ 3,025 $ (257 )
 
Corporate Results
LIFO credit (charge) $ 113 $ (59 ) $ 172 $ 3 $ 76 $ (73 )
Interest expense - net (112 ) (99 ) (13 ) (445 ) (428 ) (17 )
Unallocated corporate costs (70 ) (71 ) 1 (274 ) (342 ) 68
Employee-related exit costs - - - (71 ) - (71 )
Gains on interest rate swaps - - - - 6 (6 )
Debt buyback/exchange (5 ) - (5 ) (5 ) (12 ) 7
Pension settlements (68 ) - (68 ) (68 ) - (68 )
Other   36     8     28     73     11     62  
Total Corporate $ (106 ) $ (221 ) $ 115   $ (787 ) $ (689 )   (98 )
 
Earnings Before Income Taxes $ 702   $ 121   $ 581   $ 1,981   $ 2,336   $ (355 )
 

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.

 
Quarterly Segment Operating Profit and Corporate Results

A non-GAAP financial measure (unaudited)

    Quarter ended   Four Quarters     Quarter ended   Fiscal Year
Mar'12   June'12   Sep'12   Dec'12   2012 Sep'11   Dec'11   Mar'12   June'12   2012
(in millions)
Oilseeds Processing Operating Profit                
Crushing and origination $ 264 $ 150 $ 256 $ 261 $ 931 $

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