World Grain - September 2013 - 16

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ADM earnings slip amid pre-tax charges, tight crop supplies
DECATUR, ILLINOIS, U.S. — Pre-tax charges, the ongoing
GrainCorp Ltd. acquisition, tight crop supplies and an FCPA matter all affected second-quarter earnings for Archer Daniels Midland Co. (ADM). The company had net earnings of $223 million,
or 34¢ per share, in the quarter ended June 30, which compared
with $284 million, or 43¢ per share, in the second quarter of the
previous year.
Adjusted earnings were 46¢ per share, which compared with 38¢
per share in the second quarter of the previous year. They excluded
about $39 million, or 4¢ per share, in pre-tax LIFO charges, $51 million, or 5¢ per share, in foreign-currency hedging losses related to
the acquisition of GrainCorp, and $29 million, or 3¢ per share, of additional provisions related to a previously disclosed FCPA (Foreign
Corrupt Practices Act) matter.
ADM has discussed the FCPA matter, which dates to 2008 and
earlier, with the U.S. Department of Justice and the U.S. Securities
and Exchange Commission. ADM now believes it is appropriate to
increase its provision to $54 million from the $25 million established
in the first quarter. The matter involves the handling of grain and
feed exports.
ADM had sales and other operating income of $22.54 billion in the
second quarter, which was down from $22.67 billion in the previous
year’s second quarter.
“The team managed well through this period as tight U.S. crop

supplies reduced volumes,” said Patricia Woertz, chairman and chief
executive officer, when results were given Aug. 6. “Also, corn results
improved amid volatile ethanol industry conditions. During the quarter we continued our work to improve the company’s future returns
and earnings power over the cycle. Our effort to unlock cash reached
$2 billion, with the team reaching this milestone a half year ahead of
schedule. And, in cost, we made solid progress toward our goal of
$200 million in additional cost reductions by the end of 2014.
“Looking ahead, we’ll be managing through tight crop supplies
until the forecast large but delayed U.S. harvest.”
Oilseeds Processing profit in the quarter decreased to $321 million from $331 million in the previous year’s second quarter. Weaker
cocoa results offset a solid performance in crushing and origination.
Tight crop supplies in North America resulted in weaker soy and
softseed crush margins.
Due to improved ethanol results, Corn Processing profit increased
to $223 million from $74 million. Operating profit in Agricultural
Services fell to $81 million from $123 million.
ADM’s net debt position dropped to $5.5 billion from $8.9 billion
a year ago. For the six months ended June 30, ADM had net earnings
of $492 million, or 74¢ per share, which compared with $683 million, or $1.03, in the same time period of the previous year. Net sales
and other operating income for the six months ended June 30 were
$44.26 billion, up from $43.83 billion.

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World Grain - September 2013

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