Milling & Baking News - August 16, 2016 - 13

Juan Luciano: ADM focused on
strengthening and growing
CHICAGO - Despite a 26% decline
in earnings and a 9% dip in sales during the second quarter of fiscal 2016,
Archer Daniels Midland Co.'s top executive reflected on several successes
during the quarter while offering an
outlook for better opportunities over
the second half of the year.
In the company's Ag Services segment, ADM started operations at its
Medsofts joint venture in Egypt during the second quarter, a move Juan
Luciano, chairman and chief executive
officer, said continues ADM's expansion of its distribution value chain
through destination marketing capabilities and an asset-light approach.
"The Medsofts joint venture helps
us diversify and expand our merchandising footprint, grow our logistics
services and gets us closer to our customers as we deliver products directly
to them," Mr. Luciano said in an Aug.
2 conference call with analysts.
In the company's corn business,
ADM completed the sale of its sugarcane ethanol operations in Brazil and
began operations at its Casablanca,
Morocco-based corn wet mill. The
company also expanded its sweetener portfolio by entering into a
partnership to offer low-calorie nonbioengineered stevia and monk fruit
ingredients.
ADM introduced new products and
announced plans to expand and modernize facilities within its animal nutrition business during the quarter.
"In our lysine business, we made
process improvements that should improve yields in the second half of the

year, and we are advancing on the strategic review of our ethanol dry mills
assets," Mr. Luciano said. "We have
made management presentations to
seven parties that have indicated interest in our dry mill assets. We will await
all the proposals to determine
what is the best value-maximizing strategy for ADM. We anticipate receiving bids back by
the end of August and will then
evaluate and determine our next
steps in the process."
Meanwhile, in oilseeds Mr. Luciano
Luciano said ADM completed
a canola crush expansion project at its
plant in Lloydminster, Canada, and
added soybean crushing capacity at
its facility in Straubing, Germany. The
latter move is expected to allow ADM
to meet growing demand for nonbioengineered soybean meal and oil in
Western Europe.
ADM added to its ingredient capabilities in South America with the full ownership acquisition of Amazon Flavors.
Looking ahead, Mr. Luciano said recent improved market dynamics have
ADM poised for "better opportunities."
"The outlook for the large U.S. crop
and some of our businesses experiencing the improved margin conditions
creates a platform for a more favorable environment in the second half
of the year and some optimism as we
start to move into early 2017," he explained. "For Ag Services, current U.S.
crop conditions indicate the growing
season is progressing very well. This
is expected to translate into improved
export volumes and margins, higher

Frozen bakery products company
to build facility in Pennsylvania
HARRISBURG, PA. - Lebanon Valley
Cold Storage and Distribution Center
will build a facility on a 22.83-acre site in
the Lebanon Rails Business Park in Lebanon, Pa., Pennsylvania Governor Tom
Wolf announced on Aug. 3. The frozen
bakery products storage and manufacturing company plans to invest $38.7
million in the project and create 131 fulltime jobs over the next three years.
A 120,000-square-foot frozen, refrigerated warehouse with a production
area comprises the first phase of construction, which should be completed
early in 2017. The second phase will add
bakingbusiness.com / world-grain.com

180,000 square feet for bakery operations, including at least three production
lines for baked foods and storage space.
Lebanon Valley Cold Storage and
Distribution Center is owned by
Michael Byrd, who also owns Bake
Crafters Food Co. Based in McDonald, Tenn., Bake Crafters offers baked
foods for schools, health care operations, sandwich makers, in-store bakeries and restaurants.
Lebanon Valley Cold Storage and
Distribution Center received a funding
proposal from Pennsylvania's Department of Community and Economic

Business

utilization of our transportation network, and better merchandising and
handling opportunities for the second
half of the year.
"For corn, the strategy and flexibility
of our wet mills, along with continued
operational excellence achievements
and high capacity utilization rates,
should support improved margins
for our sweeteners and starches business for the second half of the
year. Into the future, as global
sweetener and starch demand
continues to grow, our product
and footprint expansions will
provide diversification of both
geography and starch sources
to help maximize cost positions
and drive value creation."
Ethanol margins have improved
since the beginning of the year, and
Mr. Luciano said the forward demand
environment from domestic consumption and exports appears favorable.
However, he noted that the future
margin environment will remain dependent upon industry production
levels relative to demand and the resultant inventory levels.
"We have seen this inventory-tomargins relationship over the years,
and we have seen the margins being
somewhat volatile as well," he said.
Mr. Luciano said he envisions an
improved outlook for oilseeds during
the second half of the year behind continued strong global protein demand
leveraging ADM's flex capacity and
improved crush margins.
Finally, Mr. Luciano said increased
innovation in natural health and nutritional products is leveraging the company's leadership in plant-based proteins,
powders and specialty grains, setting
the stage for future growth for WFSI. MBN
Development that includes a $250,000
Pennsylvania First program grant,
$262,000 in job creation tax credits to be
distributed on creation of the new jobs
and $58,950 in WEDnet (Workforce
and Economic Development Network)
funding for employee training. The
Pennsylvania Industrial Development
Authority also approved a $2 million
low-interest loan.
"We are so excited to find such a
beautiful building site in Lebanon
county for our new cold storage facility," said Marlene Kreidler, director
of business development, Lebanon
Valley Cold Storage and Distribution
Center. "Lebanon County is located in
the perfect sweet spot for shipping all
over the United States." MBN
Milling & Baking News XAugust 16, 2016 / 13

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Milling & Baking News - August 16, 2016

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