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Archer Daniels Midland Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 11, 2009 08:06PM

Archer Daniels Midland Company (ADM) filed Quarterly Report for the period ended 2009-03-31. Archer Daniels Midland Company is a world leader in agricultural processing and fermentation technology. ADM is one of the world's largest processors of soybeans corn wheat and cocoa. ADM is also a leader in the production of soybean oil and meal ethanol corn sweeteners and flour. The Company works with farmers across the world to turn these crops into soymeal and oil corn sweeteners flour cocoa and chocolate ethanol and biodiesel as well as a wide portfolio of other value-added food ingredients animal nutrition and industrial products. Archer Daniels Midland Company has a market cap of $16.48 billion; its shares were traded at around $25.68 with a P/E ratio of 7.4 and P/S ratio of 0.2. The dividend yield of Archer Daniels Midland Company stocks is 2.2%. Archer Daniels Midland Company had an annual average earning growth of 16.8% over the past 10 years. GuruFocus rated Archer Daniels Midland Company the business predictability rank of 3.5-star.

Highlight of Business Operations:

Agricultural Services operating profit increased $101 million for the nine months. Merchandising and handling operating profit increased $77 million due principally to improved margins resulting from opportunities created by volatile commodity and freight market conditions. Transportation results for the nine months increased primarily due to higher barge freight rates.

Other operating profit decreased $405 million for the nine months. Wheat, cocoa, malt and sugar operating profit decreased $174 million for the nine months due principally to lower equity earnings from the Company s investment in Gruma S.A.B. de C.V. related to foreign currency derivative losses (see note 11). Financial operating profit decreased $231 million for the nine months due principally to losses from managed fund investments, increased captive insurance loss provisions and decreased interest income of the Company s brokerage services business.

Corporate results increased $806 million for the nine months due principally to LIFO credits of $571 million for the nine months compared to LIFO charges of $371 million for the nine months ended March 31, 2008. Investment (expense) income decreased $188 million for the nine months primarily related to increased interest expense and decreased interest income.

Income taxes increased due principally to higher pretax earnings and to the $97 million deferred income tax charge related to the restructuring of the holding company structure through which the Company holds a portion of its equity investment in Wilmar International Limited (see note 6). Excluding the $97 million deferred income tax expense, the Company s effective tax rate for the nine months is 29.6% compared to 31.4% in the prior year s nine months. The decrease in the Company s effective tax rate is primarily due to changes in the geographic mix of pretax earnings.

At March 31, 2009, the Company had $2.6 billion of cash, cash equivalents, and short-term marketable securities and a current ratio, defined as current assets divided by current liabilities, of 2.2 to 1. Included in working capital is $5.4 billion of readily marketable commodity inventories. Cash provided by operating activities totaled $5.9 billion for the nine months compared to $3.2 billion of cash used in operations during the same nine months last year. This change was primarily due to a decrease in working capital requirements principally related to decreased commodity prices and, to a lesser extent, decreased quantities of agricultural commodity inventories, and decreased receivables. Cash used in financing activities was $3.3 billion for the nine months this year compared to cash generated by financing activities of $5.3 billion during the same nine months last year, due principally to changes in short-term borrowing requirements. Net short-term borrowings decreased primarily as a result of decreased working capital requirements.

At March 31, 2009, the Company had lines of credit totaling $6.4 billion, of which $6.1 billion was unused. Of the Company s total lines of credit, $4.2 billion support a commercial paper borrowing facility, against which there were no borrowings at March 31, 2009.

Read the The complete Report

ADM is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.


Stocks Discussed: ADM,
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