Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q2 FY2012 Earnings Presentation
23 slides from Archer-daniels-midland's earnings presentation, Jan 31, 2012
Slide 1: Second Quarter FY2012 Earnings Conference Call
Second Quarter FY2012 Earnings Conference Call January 31, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement Some of our comments constitute forward-looking statements that reflect management’s current views and estimates of future economic circumstances, industry conditions, Company performance and financial results. The statements are based on many assumptions and factors, including
Slide 3: Speakers
Speakers Pat Woertz Chairman, Chief Executive Officer and President Ray Young Senior Vice President and Chief Financial Officer Juan Luciano Executive Vice President and Chief Operating Officer ARCHER DANIELS MIDLAND COMPANY 3
Slide 4: Chairman's Perspective
Chairman’s Perspective Tough Quarter in Challenging Market Environment • Ongoing weakness in global oilseeds margins • Lower results in corn • Poor international merchandising results Optimistic about Long-Term Fundamentals and Growing Earnings Power Driving Shareholder Value • Reduced capex/M&A by
Slide 5: Q2 2012 Financial Highlights
Q2 2012 Financial Highlights Challenging Margin Environment Impacted Results Quarter Ended Dec 31 (Amounts in millions, except per share data and percentages) 2011 2010 Change Segment operating profit (1) $ 309 $ 1,362 (77%) Segment operating profit (excluding PHA charges) $ 648 $ 1,362 (52%) Net ea
Slide 6: Segment Operating Profit and Corporate Results
Segment Operating Profit and Corporate Results Quarter Ended Dec 31 (Amounts in millions) 2011 2010 Change Oilseeds Processing $ 253 $ 325 $ (72) Crushing & Origination 139 200 Refining, Packaging, Biodiesel & Other 74 78 Asia 40 47 Corn Processing $ (133) $ 399 $ (532) Sweeteners & Starches 73 119
Slide 7: Cash Flow Summary
Cash Flow Summary Dividends and Buybacks Returned $651M to Shareholders in 1H2012 Six Months Ended (Amounts in millions) December 31 2011 2010 Cash from operations before working capital changes $ 1,410 $ 1,510 Changes in working capital 1,631 (5,593) Purchases of property, plant and equipment (852)
Slide 8: Balance Sheet Highlights
Balance Sheet Highlights Strong Balance Sheet Provides Financial Flexibility (Amounts in millions) Dec 31, 2011 (1) Cash $ 1,458 Net property, plant and equipment $ 9,601 Operating working capital (2) $ 13,373 - Total Inventories 12,415 Total debt $ 9,198 - CP outstanding 130 Shareholders' equity $
Slide 9: Oilseeds Processing Highlights
Oilseeds Processing Highlights (Amounts in millions) Q2 2012 highlights: Q2 Performance • Continued margin weakness, particularly in Europe $325 $(61) $(4) $(7) $253 • Managing global crushing portfolio in response to margin environment • Year-ago quarter reflected $71M Golden Peanut gain and Q2-FY1
Slide 10: Corn Processing Highlights
Corn Processing Highlights (Amounts in millions) Q2 2012 highlights: Q2 Performance • Higher net corn costs, in part, reflecting economic hedging $399 $(46) $(147) $(339) $(133) benefits recognized in FY11 • Ethanol margins good, but declined in December • In January, announced termination of PHA bu
Slide 11: Agricultural Services Highlights
Agricultural Services Highlights (Amounts in millions) Q2 2012 highlights: Q2 Performance • Poor international $426 $(267) $(1) $158 merchandising results • Lower U.S. export volumes • Transportation earnings flat Q2-FY11 Merchandising Transportation Q2-FY12 Operating & Handling Operating Profit Pro
Slide 12: Other Businesses Highlights
Other Businesses Highlights (Amounts in millions) Q2 2012 highlights: Q2 Performance • Significant, negative mark- $212 $(150) $(31) $31 to-market losses in cocoa ($127M or $0.13 per share) • Cocoa powder demand remained good • Wheat milling results remained steady • Other financial down on Q2-FY11
Slide 13: CapEx 2012 Update
CapEx 2012 Update First-half capital spending of $850 million • Plus acquisitions of $200 million Continue to target half of growth-related capex outside U.S. • Focus on Oilseeds and Ag Services Revised 2012 capex of ~$1.4B • Plus acquisitions of ~$300 million ARCHER DANIELS MIDLAND COMPANY 13
Slide 14: Current Landscape Assessment
Current Landscape Assessment Current Market Conditions Implications OILSEEDS • Crush margins remain weak • Continued challenges in regional margin environments • Global protein meal demand growing at • Will grow into capacity over time; approximately 4% per year aligning S&D important short term • P
Slide 15: Q&A
Q&A ARCHER DANIELS MIDLAND COMPANY 1515
Slide 16: Upcoming Webcasts
Upcoming Webcasts • CAGNY Conference – Boca Raton, Florida, February 21, 2012 • ADM Oilseeds Processing Business Review – Hamburg, Germany, March 28, 2012 ARCHER DANIELS MIDLAND COMPANY 16
Slide 17: Appendix
Appendix ARCHER DANIELS MIDLAND COMPANY 1717
Slide 18: Statement of Earnings Summary
Statement of Earnings Summary (Amounts in millions, except per share data and percentages) Quarter Ended December 31 2011 2010 Change Net sales and other operating income $ 23,306 $ 20,930 $ 2,376 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Gross profit 813 1,23
Slide 19: Adjusted Earnings Per Share
Adjusted Earnings Per Share Quarter Ended December 31 2011 2010 Reported Earnings Per Share (fully diluted) $ 0.12 $ 1.14 Adjustments: LIFO (credit)/charge 0.06 0.25 PHA-related charges 0.33 - Gains on interest rate swaps - (0.05) Start-up costs - 0.02 Gain on Golden Peanut revaluation - (0.07) Adju
Slide 20: Historical ROIC and WACC Trend
Historical ROIC and WACC Trend ROIC Objective: 200 BPS over WACC Q212 Trailing 4Q LIFO Adjusted ROIC Earnings(1) $1.7B 18% Trailing 4Q LIFO Adjusted Invested Capital(1) $29.0B 16% Trailing 4Q Adjusted ROIC(1)(2) 6.0% Trailing 4Q WACC 6.3% 14% Trailing 4Q Average LIFO-Adjusted ROE(1)(2) 7.9% 12% 10%
Slide 21: Return on Invested Capital
Return on Invested Capital (Amounts in millions) LIFO Adjusted ROIC Earnings(4) Four Quarters Quarter Ended Ended Mar 31, 2011 Jun 30, 2011 Sep 30, 2011 Dec 31, 2011 Dec 31, 2011 Net earnings attributable to ADM $ 578 $ 381 $ 460 $ 80 $ 1,499 Adjustments Interest expense 121 129 113 96 459 Finance i
Slide 22: Processed Volumes
Processed Volumes Metric Tons Processed (000s) Fiscal Year 2007 2008 2009 2010 2011 Oilseeds Processing 28,439 29,532 28,248 29,095 29,630 Corn Processing 18,043 17,666 17,833 19,618 23,412 Wheat and Cocoa 7,248 7,369 7,165 7,291 7,179 53,730 54,567 53,246 56,004 60,221 FY11 FY12 Q1 Q2 Q3 Q4 Q1 Q2 O
Slide 23: Notes: Non-GAAP Reconciliation
Notes: Non-GAAP Reconciliation The Company uses certain “Non-GAAP” financial measures as defined by the Securities and Exchange Commission. These are measures of performance not defined by accounting principles generally accepted in the United States, and should be considered in addition to, not in
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