Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Sanford C. Bernstein 26th Annual Strategic Decisions Conference (June 2010)
64 slides from Archer-daniels-midland's conference presentation, Jun 2, 2010
Slide 1: Vital to the World
Vital to the World Sanford C. Bernstein 26th Annual Strategic Decisions Conference June 2, 2010 Patricia Woertz John Rice Steve Mills Dwight Grimestad Chairman & CEO EVP, Commercial & Production EVP & CFO VP, Investor Relations
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: Our Presentation Today
Vital to the World Our Presentation Today • Our strong value chain • Enhancing corporate capabilities • Segment business and strategy review 3
Slide 4: Global Trends Signal Growth Opportunity
Global Trends Signal Growth Opportunity Population Growth Need for Energy Security and Diversity Growing Interest in Environmental Improvement 4
Slide 5: Our Strategy Leverages our Value Chain For Growth
Our Strategy Leverages our Value Chain For Growth Expand the Size and Global Reach of our Core Model VALUE-ADDED CROPS SOURCE TRANSPORT PROCESS TRANSFORM DISTRIBUTE MARKET & PRODUCTS SELL Oilseeds Corn Food Cocoa Feed Wheat Fuel Palm Industrials Sugar Our Financial Strength and Industry Acumen Under
Slide 6: Business Segment Strategies Target Profitable Growth
Business Segment Strategies Target Profitable Growth • Oilseeds - Build on leadership position in the U.S. and Western Europe - Expand in South America, Central and Eastern Europe, and India - Grow in Asia with strategic partner • Corn - Build on leadership position - Increase product portfolio dive
Slide 7: Corporate Priorities Build Capability to Achieve Strategic Objectives
Corporate Priorities Build Capability to Achieve Strategic Objectives • Safety • Performance • Cost Management • Sustainability 7
Slide 8: We are Committed to the Safety of our People and our Products
We are Committed to the Safety of our People and our Products ADM Lost Work Day Injury Rate 0.78 0.77 0.67 0.54 0.45 0.31 2005 2006 2007 2008 2009 2010 YTD 8
Slide 9: We have Aligned Compensation with Shareholder Value to Drive Performance
We have Aligned Compensation with Shareholder Value to Drive Performance Top Executives • 75% of Target Total Compensation is Performance Driven Cash Base Bonus • 50% of Target Total Compensation is Issued in ADM Equity ADM • Goal setting and performance Equity plans align to build value 9
Slide 10: Cost Management Assures Competitive Performance
Cost Management Assures Competitive Performance 2010 Nine Month Results Manufacturing Costs SG&A Costs 10
Slide 11: We are Fostering Sustainable Growth
We are Fostering Sustainable Growth • Sustainability Working Groups Water Climate Change Supply Chain Management • Global Water Analysis • Carbon Sequestration Project • Corporate Responsibility Report 11
Slide 12: Agriculture can Meet Growing Demand Through Innovation, Investment and Partnership
Agriculture can Meet Growing Demand Through Innovation, Investment and Partnership 12
Slide 13: Vital to the World
Vital to the World he ADM
Slide 14: ADM's Assets are Positioned for Global Growth
ADM’s Assets are Positioned for Global Growth Sourcing facilities Oilseed processing Corn processing Cocoa & wheat processing Wilmar Sourcing distribution Processing distribution 14
Slide 15: We are Leveraging our Value Chain and Executing our Strategy
We are Leveraging our Value Chain and Executing our Strategy Expand the Size and Global Reach of our Core Model CROPS VALUE-ADDED SOURCE TRANSPORT PROCESS TRANSFORM DISTRIBUTE MARKET & PRODUCTS SELL Oilseeds Corn Food Cocoa Feed Wheat Fuel Palm Industrials Sugar Our Financial Strength and Industry A
Slide 16: We are Expanding Volumes and Diversifying Feedstocks
We are Expanding Volumes and Diversifying Feedstocks Expand the Size and Global Reach of our Core Model CROPS VALUE-ADDED SOURCE TRANSPORT PROCESS TRANSFORM DISTRIBUTE MARKET & PRODUCTS SELL Oilseeds Corn Food Cocoa Feed Wheat Fuel Palm Industrials Sugar Our Financial Strength and Industry Acumen Un
Slide 17: We are Growing the Size and Geographic Reach of our Footprint
We are Growing the Size and Geographic Reach of our Footprint Expand the Size and Global Reach of our Core Model CROPS VALUE-ADDED SOURCE TRANSPORT PROCESS TRANSFORM DISTRIBUTE MARKET & PRODUCTS SELL Oilseeds Corn Food Cocoa Feed Wheat Fuel Palm Industrials Sugar Our Financial Strength and Industry
Slide 18: We are Expanding Volumes and Diversifying our Product Portfolio
We are Expanding Volumes and Diversifying our Product Portfolio Expand the Size and Global Reach of our Core Model CROPS VALUE-ADDED SOURCE TRANSPORT PROCESS TRANSFORM DISTRIBUTE MARKET & PRODUCTS SELL Oilseeds Corn Food Cocoa Feed Wheat Fuel Palm Industrials Sugar Our Financial Strength and Industr
Slide 19: Growing Origination and Transportation Capabilities
Growing Origination and Transportation Capabilities 19
Slide 20: Our People use Industry Acumen and our Asset Network to Create Value
Our People use Industry Acumen and our Asset Network to Create Value 2020
Slide 21: Our Strategy is to Expand our Crop Origination and Transportation Network
Our Strategy is to Expand our Crop Origination and Transportation Network; Grow Destination Business • Build on leadership position in the U.S. and South America • Selectively add elevators • Improve elevator throughput • Add port and river capabilities • Grow origination footprint in Canada and Eur
Slide 22: We are Executing our Origination and Transportation Strategy
We are Executing our Origination and Transportation Strategy • Purchased seven oceangoing vessels • Modernizing North American barge fleet • Adding barges and tugboats in South America • Expanding South American origination 22
Slide 23: Oilseeds: Expanding Processing Capabilities
Oilseeds: Expanding Processing Capabilities 23
Slide 24: Our Oilseeds Asset Base is Positioned to Meet Growing Global Demand
Our Oilseeds Asset Base is Positioned to Meet Growing Global Demand Fertilizer Origination Biodiesel Refining/Packing Processing Wilmar 2424
Slide 25: In North America, Diverse Inputs and Broad Product Portfolio Create Value
In North America, Diverse Inputs and Broad Product Portfolio Create Value Lecithin Raw Material Gums Refine Sterols Soybean Vitamin E Sunflower Canola Crude Transesterification Biodiesel Flax Refine Oil Interesterification Shortening Cottonseed Peanut Hydrogenation Margarine Palm Oil Oil Oil Protein
Slide 26: We serve Europe using Local Softseeds as well as Imported Soybeans
We serve Europe using Local Softseeds as well as Imported Soybeans and Processed Products Gums Refine Lecithin Raw Material Transesterification Biodiesel Refine Sunflower Glycerin Rapeseed Oil Soybean Crude Palm Oil Interesterification Shortening Oil Hydrogenation Margarine Process Oil Protein Refin
Slide 27: Using South American Harvests, we serve both Local and Global Markets
Using South American Harvests, we serve both Local and Global Markets Crop Origination/ Merchandising Refine Oil Crop Prefinancing Seed Crop Nutrients Crop Protection Crude Oil Transesterification Biodiesel Raw Material Soybean Process Protein Sunflower 2727
Slide 28: We Participate in Growing Asian Markets through our Strategic Partner
We Participate in Growing Asian Markets through our Strategic Partner • 16% equity stake in Asia’s largest agricultural processor • Seat on board of directors • Supply and sales agreements 28
Slide 29: Oilseeds Strategies are Regionally Focused
Oilseeds Strategies are Regionally Focused • North America - Grow value-added business - Expand destination feed business • South America - Grow origination and logistics capabilities - Expand processing capacities • Europe and India - Grow origination and logistics capabilities - Increase processin
Slide 30: We are Increasing Processing Capacity and Efficiency for Long-Term Demand
We are Increasing Processing Capacity and Efficiency for Long-Term Demand • North America - Expanding crushing capacities, refining, low-trans production • South America - Added fertilizer blending capacity - Acquired vegetable oil bottling facility - Expanding biodiesel capacity • Europe - Acquired
Slide 31: Corn Processing: Expanding Processing/Transforming Capabilities
Corn Processing: Expanding Processing/ Transforming Capabilities 31
Slide 32: ADM has a Competitive Advantage in Corn Processing
ADM has a Competitive Advantage in Corn Processing Dry Mill Wet Mill Sugarcane Ethanol Corn Joint Ventures 3232
Slide 33: Corn Processing Production Flexibility Enhances Value
Corn Processing Production Flexibility Enhances Value CORN SYRUP, HIGH FRUCTOSE CORN SYRUP Dextrose (Liquid and Crystalline), Maltodextrin Starch Xanthan Gum, Citric Acid, Lactic Acid, Yeast Sorbitol (Liquid and Crystalline) Propylene Glycol, Ethylene Glycol Isosorbide – Pilot Scale Lysine, Threonin
Slide 34: Our Broad Product Line Serves a Wide Range of Markets
Our Broad Product Line Serves a Wide Range of Markets 3434
Slide 35: We are Well-Positioned to Serve the Growing Ethanol Market
We are Well-Positioned to Serve the Growing Ethanol Market ADM Plants Terminals 3535
Slide 36: Ethanol Demand Exceeds RFS Requirements
Ethanol Demand Exceeds RFS Requirements 16 14 Actual 12 RFS 10 Billion Gallons 8 6 4 2 0 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2015 Calendar Year Source: EIA 36
Slide 37: Typical Sweeteners and their Compositions
Typical Sweeteners and their Compositions Sweetener % Fructose* % Glucose* Corn Syrup Less than 0.5 99.5 HFCS – 42 42 58 Honey 48 52 Sucrose 50 50 Grape Juice Concentrate 53 47 HFCS – 55 55 45 Apple Juice Concentrate 65 35 Pear Juice Concentrate 74 26 *After metabolism by the body Source: John S. Wh
Slide 38: HFCS Remains an Important Product and an Attractive Alternative to Sugar
HFCS Remains an Important Product and an Attractive Alternative to Sugar • HFCS has broader functionality than sucrose • Relative to sugar, HFCS saves the food industry billions of dollars each year • Nutritionally, HFCS is the same as sugar or honey • Nielsen data show that flagging brands generall
Slide 39: Our Strategy is to Leverage our Processing Expertise and Diversify Feedstocks
Our Strategy is to Leverage our Processing Expertise and Diversify Feedstocks • Increase the diversity of our product portfolio ‐ Industrial chemicals ‐ Advanced biofuels • Optimize the flexibility of our processing Dextrose operations • Build or acquire carbohydrate processing in key regions around
Slide 40: We are Increasing Processing Capacity and Efficiency
We are Increasing Processing Capacity and Efficiency Corn • Operating Columbus dry mill, completing Cedar Rapids dry mill • Expanded Decatur swing capacity between ethanol and corn syrups • Completed construction of Clinton and Columbus co-gen plants • Growing product portfolio • Reducing plant prod
Slide 41: Cocoa and Wheat: Expanding Processing / Transforming Capabilities
Cocoa and Wheat: Expanding Processing / Transforming Capabilities 41
Slide 42: We are a Leader in Cocoa Processing
We are a Leader in Cocoa Processing Processing Plant Buying Station 4242
Slide 43: We are the Leading Flour Miller in North America, and a Leader in the UK
We are the Leading Flour Miller in North America, and a Leader in the UK Wheat & Durum Milling Dry Corn Milling Milo & Sorghum Milling Bulgur Milling Rice Milling Dry Sweeteners 4343
Slide 44: Cocoa and Milling Strategies Target Profit Growth
Cocoa and Milling Strategies Target Profit Growth • Cocoa: Gain efficiencies from the integration of Schokinag, Ghana and Hazelton, PA. • Milling: Improve efficiencies of existing facilities 44
Slide 45: Focusing on Profitable Growth
Focusing on Profitable Growth 45
Slide 46: Our Diversified Portfolio Drives Earnings Growth
Our Diversified Portfolio Drives Earnings Growth FY08 FY09* 9 mo FY10 Oilseed Processing Corn Processing Ag Services Other * Other results in FY09 were a loss of $6M 46
Slide 47: A Decade of Earnings Growth
A Decade of Earnings Growth (Amounts in millions) $2,500 $2,000 $1,500 2,283 2,134 $1,000 1,305 1,362 1,443 973 $500 512 569 383 460 301 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 9 months Adjusted for LIFO 47
Slide 48: ADM is Committed to Profitable Growth
ADM is Committed to Profitable Growth • We will target opportunities that leverage the value chain and enhance shareholder returns • We will grow through: - Selective acquisitions - Expanding current facilities - Building new assets in targeted markets • Investments must support long-term strategy a
Slide 49: Financial Returns
Financial Returns $20 20% $16 16% Net Asset Base ($B) $12 12% $8 8% $4 4% $0 0% Q209 Q309 Q409 Q110 Q210 Q310 (1) (1) Fixed Investment Working Capital/Other Liabilities Trailing 4 quarter RONA % (1) Trailing 4 quarter ROE % Annualized quarterly RONA % Annualized quarterly ROE % Trailing 4 quarter RO
Slide 50: ADM: Vital to the World
ADM: Vital to the World • Global trends offer opportunity for growth • Our global asset base is positioned to capture value • Our people enhance the value of our global assets • Our business portfolio is diverse and strong 50
Slide 51: Vital to the World
Vital to the World he ADM
Slide 52: Appendix
Appendix 52
Slide 53: Financial Highlights
Financial Highlights (Amounts in millions, except per share data and percentages) Quarter Ended Nine Months Ended March 31 March 31 2010 2009 Change 2010 2009 Change Segment operating profit(1) $ 696 $ 254 174% $2,440 $2,245 9% Net earnings attributable to ADM $ 421 $ 3 ↑$418 $1,484 $1,626 (9%) Earn
Slide 54: Statement of Earnings Summary
Statement of Earnings Summary (Amounts in millions, except per share data and percentages) Quarter Ended Nine Months Ended March 31 March 31 2010 2009 Change 2010 2009 Change Net sales and other $ 15,145 $ 14,842 2% $ 45,979 $ 52,675 (13%) operating income ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Slide 55: Segment Operating Profit Summary
Segment Operating Profit Summary (Amounts in millions) Quarter Ended Nine Months Ended March 31 March 31 2010 2009 Change 2010 2009 Change Oilseeds Processing Crushing & Origination $ 272 $ 100 $ 600 $ 626 Refining, Packaging, Biodiesel & Other 66 52 212 244 Asia 67 72 229 183 405 224 $ 181 1,041 1,
Slide 56: Our Balance Sheet is Strong
Our Balance Sheet is Strong (Amounts in millions) March 31 June 30 2010 2009 Cash(1) $ 2,066 $ 1,555 Net property, plant and equipment 8,642 7,950 (2) Operating working capital 8,409 9,372 - Total inventories 8,219 7,782 Total debt 7,421 7,996 - CP outstanding 0 0 Shareholders' equity 14,769 13,653
Slide 57: Cash Flow Summary
Cash Flow Summary (Amounts in millions) Nine Months Ended March 31 2010 2009 Cash from operations before working capital changes $ 2,018 $ 2,020 Changes in working capital 757 3,831 Purchases of property, plant and equipment (1,230) (1,462) Business acquisitions (59) (44) Business disposals - 258 Ma
Slide 58: Summary of Specified Items
Summary of Specified Items (Amounts in millions) Oilseeds Corn Ag Impact Impact Processing Processing Services Other Corporate Before Tax After Tax Quarter ended March 31, 2010 LIFO credit $ - $ - $ - $ - $ 43 $ 43 $ 27 Debt buyback costs - - - - (75) (75) (47) Quarter ended March 31, 2009 LIFO char
Slide 59: Oilseeds Processing is Globally Balanced and Positioned to Grow
Oilseeds Processing is Globally Balanced and Positioned to Grow • 93,000 MT/day oilseeds capacity - 52% North America (78% soybean, 22% softseed) - 34% Europe (54% soybean, 46% softseed) - 14% South America (96% soybean) • Asia-Wilmar ownership (16% equity ownership) • 22 MM MT/yr protein meal capac
Slide 60: Corn Processing's Diversified Product Portfolio Enhances Value
Corn Processing’s Diversified Product Portfolio Enhances Value • 60,000 MT/day capacity in North America - 5 wet mills, 3 dry mills • Leading positions in - corn sweeteners - ethanol - starches and amino acids • JV growth opportunities - Eastern Europe - Mexican HFCS 60
Slide 61: We are a Leading Flour Miller and a Leading Global Cocoa Processor
We are a Leading Flour Miller in the U.S. and U.K. and a Leading Global Cocoa Processor • 27,000 MT/day Flour Milling capacity - North America/Caribbean - Europe • 3,000 MT/day Chocolate and Cocoa Bean Processing capacity - NA, SA, Europe, Africa, and Asia 61
Slide 62: LIFO Adjusted RONA Assets – FY2010
LIFO Adjusted RONA Assets – FY2010 (Amounts in millions) Quarter Ended Four Quarter Jun 30, 2009 Sep 30, 2009 Dec 31, 2009 Mar 31, 2010 Average Investment in affiliates $ 2,459 $ 2,559 $ 2,693 $ 2,671 2,596 Goodwill 532 531 524 519 526 Net PP&E 7,950 8,366 8,636 8,642 8,399 Fixed Investment 10,941 1
Slide 63: LIFO Adjusted RONA Earnings – FY2010
LIFO Adjusted RONA Earnings – FY2010 (Amounts in millions) Four Quarters Quarter Ended Ended Jun 30, 2009 Sep 30, 2009 Dec 31, 2009 Mar 31, 2010 Mar 31, 2010 Net earnings attributable to ADM $ 58 $ 496 $ 567 $ 421 $ 1,542 Adjustments Investment Income (36) (30) (36) (34) (136) Interest Expense 98 98
Slide 64: Notes: Non-GAAP Reconciliation and Restatement Information
Notes: Non-GAAP Reconciliation and Restatement Information (1) 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 co