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

<p class='bwalignc'> <i>Adjusted EPS of $0.60, up 18 percent from year-ago quarter</i> </p> <p class='bwalignc'> <i>Good operating results despite challenging conditions caused by U.S. drought</i> </p>

Tuesday, February 05, 2013

ADM Reports Second Quarter 2012.5 Earnings of $510 Million or $0.77 per Share07:00 EST Tuesday, February 05, 2013 DECATUR, Ill. (Business Wire) -- Archer Daniels Midland Company (NYSE: 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 (NYSE: 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 reconciliationsFinancial Tables Follow       Segment Operating Profit and Corporate ResultsA 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 ResultsA 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 $ 106 $ 121 $ 264 $ 150 $ 641 Refining, packaging, biodiesel, and other 79 84 28 50 241 55 77 79 84 295 Cocoa and other 159 52 29 36 276 2 (30 ) 159 52 183 Asia   40       45       23       64       172     57       41       40       45       183   $ 542     $ 331     $ 336     $ 411     $ 1,620   $ 220     $ 209     $ 542     $ 331     $ 1,302     Corn Processing Operating Profit Sweeteners and starches $ 95 $ 135 $ 94 $ 97 $ 421 $ 30 $ 75 $ 95 $ 135 $ 335 Bioproducts (excluding charges) 48 (61 ) (26 ) (94 ) (133 ) 153 135 48 (61 ) 275 Restructuring and exit costs   (10 )     -       -       -       (10 )   -       (339 )     (10 )     -       (349 ) $ 133     $ 74     $ 68     $ 3     $ 278   $ 183     $ (129 )   $ 133     $ 74     $ 261     Agricultural Services Operating Profit Merchandising and handling (excluding item) $ 148 $ 30 $ 108 $ 129 $ 415 $ 209 $ 106 $ 148 $ 30 $ 493 Gain on interest in GrainCorp - - - 62 62 - - - - - Transportation 27 17 19 48 111 28 53 27 17 125 Milling and other (excluding charge) 86 76 97 78 337 86 81 86 76 329 Asset impairment charge   -       -       (146 )     -       (146 )   -       -       -       -       -   $ 261     $ 123     $ 78     $ 317     $ 779   $ 323     $ 240     $ 261     $ 123     $ 947     Other Operating Profit Financial $ (18 )   $ 16     $ 16     $ 77     $ 91   $ (5 )   $ 22     $ (18 )   $ 16     $ 15   $ (18 )   $ 16     $ 16     $ 77     $ 91   $ (5 )   $ 22     $ (18 )   $ 16     $ 15     Segment Operating Profit $ 918 $ 544 $ 498 $ 808 $ 2,768 $ 721 $ 342 $ 918 $ 544 $ 2,525   Corporate Results LIFO credit (charge) $ (107 ) $ 50 $ (53 ) $ 113 $ 3 $ 126 $ (59 ) $ (107 ) $ 50 $ 10 Interest expense - net (114 ) (112 ) (107 ) (112 ) (445 ) (98 ) (99 ) (114 ) (112 ) (423 ) Unallocated corporate costs (67 ) (67 ) (70 ) (70 ) (274 ) (84 ) (71 ) (67 ) (67 ) (289 ) Employee-related exit costs (71 ) - - - (71 ) - - (71 ) - (71 ) Debt buyback/exchange - - - (5 ) (5 ) (4 ) - - - (4 ) Pension settlements - - - (68 ) (68 ) - - - - - Other   9       1       27       36       73     (1 )     8       9       1       17   $ (350 )   $ (128 )   $ (203 )   $ (106 )   $ (787 ) $ (61 )   $ (221 )   $ (350 )   $ (128 )   $ (760 )   Earnings Before Income Taxes $ 568     $ 416     $ 295     $ 702     $ 1,981   $ 660     $ 121     $ 568     $ 416     $ 1,765     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.   Consolidated Statements of Earnings (unaudited)       Quarter ended     Six months ended   December 31   December 31 2012   2011 2012   2011 (in millions, except per share amounts)     Net sales and other operating income $ 24,921 $ 23,306 $ 46,729 $ 45,208 Cost of products sold   23,925     22,493     44,927     43,361   Gross profit 996 813 1,802 1,847 Selling, general and administrative expenses (479 ) (423 ) (869 ) (830 ) Equity in earnings of unconsolidated affiliates 142 127 255 251 Investment income 29 22 59 62 Interest expense (107 ) (96 ) (213 ) (209 ) Asset impairment, exit and restructuring costs - (352 ) (146 ) (352 ) Other income (expense) – net   121     30     109     12   Earnings before income taxes 702 121 997 781 Income taxes   (192 )   (38 )   (303 )   (237 ) Net earnings including noncontrolling interests 510 83 694 544 Less: Net earnings (losses) attributable to noncontrolling interests   -     3     2     4   Net earnings attributable to ADM $ 510   $ 80   $ 692   $ 540     Diluted earnings per common share $ 0.77   $ 0.12   $ 1.05   $ 0.81     Average number of shares outstanding   661     667     661     670       Other income (expense) - net consists of: Net gain on marketable securities transactions $ 43 $ 11 $ 45 $ 16 Gain on interest in GrainCorp 62 - 62 - Debt buyback/exchange costs (5 ) - (5 ) (12 ) Other – net   21     19     7     8   $ 121   $ 30   $ 109   $ 12       Summary of Financial Condition (unaudited)       December 31, December 31, 2012       2011 (in millions) NET INVESTMENT IN Cash and cash equivalents $ 1,714 $ 864 Short-term marketable securities 576 594 Operating working capital (a) 13,563 13,373 Property, plant, and equipment 10,123 9,601 Investments in and advances to affiliates 3,170 3,211 Long-term marketable securities 717 352 Other non-current assets   1,364   1,313 $ 31,227 $ 29,308   FINANCED BY Short-term debt $ 2,816 $ 834 Long-term debt, including current maturities 6,724 8,364 Deferred liabilities 2,556 1,945 Shareholders' equity   19,131   18,165 $ 31,227 $ 29,308   (a) Current assets (excluding cash and cash equivalents and short-term marketable securities) less current liabilities (excluding short-term debt and current maturities of long-term debt)           Summary of Cash Flows (unaudited) Six Months Ended December 31 2012     2011 (in millions) Operating Activities Net earnings $ 694 $ 544 Depreciation and amortization 435 414 Asset impairment charge 146 350 Other – net (4 ) 102 Changes in operating assets and liabilities   1,207     1,631   Total Operating Activities 2,478 3,041   Investing Activities Purchases of property, plant and equipment (615 ) (852 ) Net assets of businesses acquired (26 ) (206 ) Proceeds from sale of Gruma 450 - Marketable securities – net (898 ) 195 Cash held in a deconsolidated entity - (130 ) Other investing activities   116     59   Total Investing Activities (973 ) (934 )   Financing Activities Long-term debt borrowings 106 91 Long-term debt payments (1,423 ) (173 ) Net borrowings (repayments) under lines of credit 660 (1,076 ) Debt repayment premium and costs (197 ) (32 ) Purchases of treasury stock - (427 ) Cash dividends (230 ) (224 ) Other   2     (17 ) Total Financing Activities   (1,082 )   (1,858 )   Increase (decrease) in cash and cash equivalents 423 249 Cash and cash equivalents - beginning of period   1,291     615   Cash and cash equivalents - end of period $ 1,714   $ 864           Segment Operating Analysis (unaudited)         Quarter Ended Four Quarters Ended   December 31   December 31 2012     2011       2012   2011 (‘000s of metric tons) Processed volumes Oilseeds 8,406 8,191 31,820 29,930 Corn 6,026 6,297 24,517 24,078 Milling and Cocoa 1,813 1,855 7,023 7,211 Total processed volumes 16,245 16,343 63,360 61,219       Quarter Ended Four Quarters Ended   December 31 December 31 2012   2011       2012   2011 (In millions) Net sales and other operating income Oilseeds Processing $ 8,364 $ 8,266 $ 35,430 $ 33,581 Corn Processing 3,041 3,158 11,830 11,755 Agricultural Services 13,485 11,854 43,159 42,708 Other   31   28   140   111 Total net sales and other operating income $ 24,921 $ 23,306 $ 90,559 $ 88,155     Segment Operating Analysis (unaudited)       Quarter ended   Four Quarters Mar'12   June'12   Sept'12   Dec'12   2012 (In '000 metric tons) Processed volumes       Oilseeds 8,159 7,793 7,462 8,406 31,820 Corn 6,174 6,036 6,281 6,026 24,517 Milling and Cocoa   1,740     1,680     1,790     1,813     7,023 Total processed volumes   16,073     15,509     15,533     16,245     63,360   Quarter ended   Fiscal Year Sept'11   Dec'11   Mar'12   June'12   2012 (In '000 metric tons) Processed volumes Oilseeds 7,018 8,191 8,159 7,793 31,161 Corn 6,111 6,297 6,174 6,036 24,618 Milling and Cocoa   1,881     1,855     1,740     1,680     7,156 Total processed volumes   15,010     16,343     16,073     15,509     62,935   Quarter ended   Four Quarters Mar'12   June'12   Sept'12   Dec'12   2012 (In millions) Net sales and other operating income Oilseeds Processing $ 7,715 $ 9,663 $ 9,688 $ 8,364 $ 35,430 Corn Processing 2,835 2,828 3,126 3,041 11,830 Agricultural Services 10,571 10,147 8,956 13,485 43,159 Other   34     37     38     31     140 Total net sales and other operating income $ 21,155   $ 22,675   $ 21,808   $ 24,921   $ 90,559   Quarter ended   Fiscal Year Sept'11   Dec'11   Mar'12   June'12   2012 (In millions) Net sales and other operating income Oilseeds Processing $ 9,071 $ 8,266 $ 7,715 $ 9,663 $ 34,715 Corn Processing 3,293 3,158 2,835 2,828 12,114 Agricultural Services 9,510 11,854 10,571 10,147 42,082 Other   28     28     34     37     127 Total net sales and other operating income $ 21,902   $ 23,306   $ 21,155   $ 22,675   $ 89,038     Adjusted Earnings Per ShareA non-GAAP financial measure (unaudited)     Quarter Ended     Four QuartersEnded December 31 December 31 2012     2011 2012 Earnings Per Share (fully-diluted) $ 0.77     $ 0.12 $ 2.08 Adjustments: LIFO charge/(credit) (a) (0.11 ) 0.06 - Asset impairment charge – Gruma (b) - - 0.16 Asset impairment charge – PHA (c) - 0.33 - Restructuring and exit costs (d) - - 0.08 Gain on interest in GrainCorp (e) (0.07 ) - (0.07 ) Gain on sale of assets (f) (0.04 ) - (0.04 ) Pension settlements (g) 0.07 - 0.07 Brazil income tax remeasurement (h) 0.01 - 0.02 Adjust quarterly effective tax rate to fiscal year average (i)   (0.03 )   -   -   Sub-total adjustments   (0.17 )   0.39   0.22   Adjusted Earnings Per Share (non-GAAP) $ 0.60   $ 0.51 $ 2.30       (a)   The Company's pretax changes in its LIFO reserves during the period, tax effected using the Company's U.S. effective income tax rate. (b) The asset impairment charge related to the Company's investments associated with Gruma, tax effected using the applicable U.S. and Mexican tax rates. (c) The asset impairment charge related to the PHA business, tax effected using the Company's U.S. effective income tax rate. (d) The restructuring and exit costs related primarily to the global workforce reduction program, tax effected using the applicable U.S., European and South American taxrates. (e) The gain on the Company's interest in the shares of GrainCorp, tax effected using the applicable U.S. and European tax rates. (f) The gain on the sale of certain of the Company's exchange membership interests, tax effected using the Company's U.S. effective income tax rate. (g) The one-time expense related to pension settlements, tax effected using the applicable U.S. and European tax rates. (h) The tax impact of foreign-exchange remeasurement of certain Brazilian assets. (i) The impact to EPS if the December 31, 2012 final effective income tax rate of 30% were used.   Adjusted EPS is ADM's fully diluted EPS after removal of the effect on Reported EPS of certain specified items as more fully described above. Management believes that Adjusted EPS is a useful measure of ADM's performance because it provides investors additional information about ADM's operations allowing better evaluation of ongoing business performance. Adjusted EPS is a non-GAAP financial measure and is not intended to replace or be an alternative to EPS, the most directly comparable GAAP financial measure, or any other measures of operating results under GAAP. Earnings amounts in the tables above have been divided by the company's diluted shares outstanding for each respective quarter in order to arrive at an adjusted EPS amount for each specified item. Archer Daniels Midland CompanyMedia RelationsDavid Weintraub, 217-424-5413orInvestor RelationsRuth Ann Wisener, 217-451-8286