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Archer Daniels Midland Company Reports Operating Results (10-Q)

February 06, 2012 | About:
10qk

10qk

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Archer Daniels Midland Company (ADM) filed Quarterly Report for the period ended 2011-12-31.

Archerdanielsmidland Co. has a market cap of $19.74 billion; its shares were traded at around $29.55 with a P/E ratio of 11.24 and P/S ratio of 0.24. The dividend yield of Archerdanielsmidland Co. stocks is 2.37%. Archerdanielsmidland Co. had an annual average earning growth of 17.7% over the past 10 years. GuruFocus rated Archerdanielsmidland Co. the business predictability rank of 4-star.

Highlight of Business Operations:

Oilseeds Processing operating profit decreased $72 million to $253 million. Crushing and Origination operating profit decreased $61 million to $139 million primarily due to the continued weak global oilseed crushing margins, particularly in Europe. Prior year quarter European results included losses from mark-to-market changes in the value of futures and other contracts accounted for as derivatives. Though not designated as hedges for accounting purposes, these derivatives serve as economic hedges for changes in value of certain of the Company s inventories, which are recorded on a lower of cost or market basis. The prior year quarter also included the $71 million Golden Peanut Gain. Refining, Packaging, Biodiesel, and Other results of $74 million were essentially flat compared to last year. Asia results were in line with last year, principally reflecting ADM s share of its results from equity investee, Wilmar.

Corn Processing operating results decreased $532 million to an operating loss of $133 million. The loss primarily reflected the $339 million asset impairment charges and exit costs related to the Company s bioplastics business. Excluding the bioplastic charges and exit costs, Corn Processing operating profit of $206 million in the current year quarter represents a decline of $193 million compared to the prior year quarter. Net corn costs increased from the second quarter of last year mainly due to mark-to-market benefits recognized in prior quarters of corn futures contracts entered into as economic hedges of this quarter s corn requirements. Sweeteners and Starches operating profit decreased $46 million to $73 million, as higher net corn costs more than offset higher average selling prices and sales volumes. Export demand for sweeteners remained strong. Bioproducts profit in the quarter decreased $486 million to a loss of $206 million, including the $339 million bioplastic impairment charge. This quarter, ethanol and lysine margins were good although late in the quarter spot ethanol margins declined as industry production increased and export demand declined. Gains from ownership and futures positions this quarter were lower than the prior year. Bioproducts results in the prior year were negatively impacted by startup costs of $22 million related to the Company s new dry-grind ethanol, bioplastic, and glycol plants.

Corporate results were a loss of $188 million this quarter compared to a loss of $364 million in last year s quarter. The effects of changing commodity prices on LIFO inventory valuations resulted in a charge of $59 million in this quarter compared to a charge of $254 million for the prior year quarter. Corporate unallocated interest expense decreased $17 million mostly due to the reversal of accrued interest expense resulting from a favorable settlement of an uncertain income tax position. In the prior year quarter, the Company recognized $55 million of unrealized gains on interest rate swaps. Other increased $24 million to income of $8 million principally related to income in the current year quarter for the elimination of earnings attributable to mandatorily redeemable interests, compared to expense in the prior year quarter.

Net earnings attributable to controlling interests decreased $537 million to $540 million primarily due to lower segment operating profit, partially offset by lower corporate expenses. Segment operating profit for the six months ended December 31, 2011 declined $1.1 billion to $1.0 billion amid challenging conditions generally affecting all reportable segments. In the six months ended December 31, 2011, segment operating profit included $339 million of impairment charges and exit costs related to the Company s exit from its Clinton, IA bioplastics business. Corporate expenses for the six months ended December 31, 2011 included a credit of $67 million from the effect of decreasing agricultural commodity prices on LIFO inventory valuation reserves, compared to charges of $377 million in the six months ended December 31, 2010.

Corn Processing operating results decreased $694 million to $46 million. The current year results include $339 million in asset impairment charges and exit costs related to the Company s bioplastics business. Excluding the bioplastic charges and exit costs, Corn Processing operating profit of $385 million in the current year represents a decline of $355 million compared to the prior year. Processed volumes were up 6 percent while net corn costs increased compared to last year. Sweeteners and Starches operating profit decreased $164 million to $101 million, as higher net corn costs more than offset higher average selling prices and sales volumes. Export demand for sweeteners remained strong. Net corn costs for sweeteners and starches were higher partly due to mark-to-market benefits recognized in prior quarters of corn futures contracts entered into as economic hedges of this period s corn requirements. Bioproducts profit in the quarter decreased $530 million to a loss of $55 million, including the $339 million bioplastic impairment charges. Late in the period, spot ethanol margins declined as industry production increased and export demand declined. Gains from ownership and futures positions this year to date were lower than the prior year. Bioproducts results in the prior year were negatively impacted by startup costs of $54 million related to the Company s new dry-grind ethanol, bioplastic, and glycol plants.

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