ADM Reports Fourth-Quarter Earnings of $ 381 Million

We earned record operating profit for the fiscal year with our growing global asset base, diversified product portfolio and the acumen of the ADM team,” said Patricia Woertz, ADM chairman and CEO.

Aug 3 2011 --- Archer Daniels Midland Company reported net earnings for the fiscal year ended June 30, 2011, of $ 2.0 billion and record segment operating profit of $ 4.0 billion, up 5 percent and 24 percent, respectively, from the prior year.

For the quarter ended June 30, 2011, net earnings were $ 381 million, down $ 65 million, and segment operating profit was $ 888 million, up $ 89 million, from the same period one year earlier.

- ADM earned $ 0.58 diluted EPS for the fourth quarter, versus last year's $ 0.69 fourth quarter.
- Fourth-quarter segment operating profit improved 11 percent from the same period last year, to $ 888 million.
- Oilseeds Processing profit increased $ 20 million on strong performance in North American crushing operations, despite a weak global margin environment.
- Corn Processing profit decreased $ 22 million on significantly higher net corn costs.
- Agricultural Services profit increased $ 15 million due to strong U.S. merchandising results.
- Net income was negatively impacted by tax expense related to specific items and geographic mix of earnings.

“Despite a challenging environment in several key markets, ADM delivered solid operating results across all our businesses for the quarter. We earned record operating profit for the fiscal year with our growing global asset base, diversified product portfolio and the acumen of the ADM team,” said Patricia Woertz, ADM chairman and CEO. “Looking ahead, we are confident in our people, our assets and our financial strength to deliver profitable growth and value for our shareholders as we serve the vital needs of a growing world.”

Net earnings for the fourth quarter of $ 381 million decreased $ 65 million due principally to higher income tax expense of $ 280 million. This was partially offset by higher segment operating profit of $ 89 million and credits in LIFO inventory valuations, included in corporate, caused by lower agricultural commodity prices at the end of the fourth quarter compared to the beginning of the quarter. Earnings before income taxes include a LIFO credit of $ 52 million or $ 0.05 per share this quarter, compared to a LIFO charge of $ 23 million or $ 0.02 per share last year.

The company's effective income tax rate for the fourth quarter was 50 percent, compared to the prior year's quarter rate of 19 percent. ADM recorded additional tax expenses in the fourth quarter to bring the effective tax rate for the full year to 33 percent compared to the prior year's rate of 26 percent. The effective tax rate for the fiscal year was atypical and was primarily the result of several unfavorable specific tax items and changes in the geographic mix of earnings.

For fiscal year 2012, based on current estimates, ADM expects its effective tax rate to be in the range of 28-30 percent.

Oilseeds Processing

Oilseeds operating profit in the fourth quarter increased $ 20 million to $ 379 million.
Crushing and origination operating profit increased $ 14 million to $ 232 million for the quarter. North American results improved across the oilseed portfolio, particularly in softseeds, despite a weak margin environment. European and South American results were lower and were partially offset by positive mark-to-market timing effects.

Refining, packaging, biodiesel and other generated a profit of $ 86 million for the quarter, up $ 7 million from last year, as improved results from North America offset lower results from Europe and South America.

Oilseeds results in Asia for the quarter were in line with last year, principally reflecting ADM's share of the results from equity investee, Wilmar International Limited.

Corn Processing

For the quarter, corn processing operating profit was $ 118 million, a decline of $ 22 million from the same quarter last year. While processed volumes were up 15 percent, net corn costs increased significantly from the fourth quarter of last year.

Sweeteners and starches operating profit of $ 9 million was down $ 110 million, as higher average selling prices and sales volumes were more than offset by higher net corn costs. Export demand for sweeteners remained strong.

Bioproducts profit in the quarter rose $ 88 million to $ 109 million, driven by higher ethanol prices, favorable ownership positions and strong demand for value-added food and feed ingredients, particularly lysine and other amino acids.

Agricultural Services

Agricultural Services operating profit of $ 193 million increased $ 15 million from last year's results.

Merchandising and handling earnings increased primarily due to stronger results from North American interior elevators and export operations, partially offset by weaker international results. Earnings from transportation operations were essentially flat compared to the fourth quarter of last year.

Other

In the fourth quarter, profits from ADM's Other business units increased $ 76 million to $ 198 million.

In other processing, which includes wheat milling, cocoa and ADM's share of Gruma, S.A.B. de C.V., profits were $ 192 million, an increase of $ 64 million from the year-ago quarter. ADM's portion of Gruma's results included a $ 78 million gain on the disposal of assets.

Other financial increased $ 12 million mainly due to improved results of ADM's captive insurance subsidiary and ADM Investor Services.

Corporate

Corporate results improved $ 125 million. Lower commodity prices through the fourth quarter led to $ 52 million of LIFO credits on a decrease in ADM's LIFO inventory valuation reserves this quarter. This is compared to a LIFO charge of $ 23 million a year ago. Last year's fourth quarter also included $ 59 million of unrealized losses on interest rate swaps.

Current Market Conditions

U.S. corn and soybean supplies are tight. Overall global crop supplies remain adequate following a good world wheat harvest and a record soybean harvest in South America. ADM is monitoring crop progress and harvests in Europe, North America and China.

Global demand for crops and agricultural products remains strong. Global protein meal and vegetable oil demand continues to grow, while industry margins remain under pressure. Export demand continues to drive strong U.S. corn sweetener volumes. With positive blending economics, ethanol consumption in the U.S. remains at maximum blendable levels.