Third Quarter FY2007 Earnings Conference Call Archer Daniels Midland Company

Transcription

1 Earnings Conference Call Archer Daniels Midland Company Patricia Woertz Douglas Schmalz John Rice Brian Peterson Dwight Grimestad Chairman, CEO SVP and CFO EVP, Global Marketing SVP, Corporate Affairs VP, Investor Relations and President and Risk Management

2 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 availability and prices of raw materials, market conditions, operating efficiencies, access to capital and actions of governments. Any changes in such assumptions or factors could produce significantly different results. To the extent permitted under applicable law, the Company assumes no obligation to update any forward-looking statements as a result of new information or future events. 2

3 Table of Contents Financial Earnings Highlights Page 4 Earnings Summary Page 5 Target Performance Objectives Page 6 Profit by Segment Page 7-12 Summary of Financial Condition Page 13 Capital Projects Update Page 14 Cash Flow Highlights Page 15 Q&A Page 16 Upcoming Events Page 17 Appendix Page

4 Financial Earnings Highlights (Amounts in millions, except for per share data and percentages) Third Quarter FY07 FY06 % Change Net sales and other operating income $ 11,381 $ 9,123 25% Gross profit % Selling, general and administrative expenses % Gain on sale of Arkady food ingredient business Financing cost net % Effective tax rate 34.8% 29.4% 18% Net earnings $ 363 $ 348 4% Diluted earnings per share % 4

5 Earnings Summary (After tax amounts in millions, except for per share amounts) $500 $363 ($9) $14 ($33) $335 $.56 per share $.51 per share FY07 $0 Net Earnings as Reported Gains on securities transactions LIFO Charge Gain on Sale Arkady Food Ingredients Net Earnings Excluding Unusual Items $500 $348 $7 ($4) $3 $354 $.53 per share $.54 per share FY06 $0 Net Earnings as Reported Gains on securities transactions Abandonment Charge Plant Closing Costs Net Earnings Excluding Unusual Items 5

6 Target Performance Objectives Metric Return on Net Assets (RONA) Exceeds ADM s approximate 8% cost of capital Equals adjusted earnings net assets See appendix for calculation Objective 13% Actual 13.7% Cost Per Metric Ton See appendix for calculation Less than $110 per metric ton $

7 Profit by Segment (Amounts in millions, except for percentages) Oilseeds Processing Corn Processing Other Sweeteners and Starches Bioproducts Agricultural Services Food, Feed and Industrial Financial Total Segment Profit Corporate Profit Before Income Taxes Third Quarter FY07 $ 169 FY06 $ (37) (57) $ 556 $ 493 % Change -5% 12% 18% 15% -49% 185% -15% 76% 8% -35% 13% 7

8 Oilseeds Processing Profit Analysis (Amounts in millions) $200 $177 ($32) $14 $6 $4 $169 $0 FY06 Profit Margin Costs Equity Earnings of Affiliates Abandonment Charge FY07 Profit 8

9 Corn Processing Profit Analysis (Amounts in millions) $300 $30 $10 ($8) $252 $219 $1 $0 FY06 Profit Margin Costs Equity Earnings of Affiliates Gain on Sale of Abandoned Assets FY06 FY07 Profit 9

10 Agricultural Services Profit Analysis (Amounts in millions) $125 $79 ($1) ($39) ($17) $12 $40 $6 $0 FY06 Profit Transportation Global Merchandising and Handling Costs Equity Earnings of Affiliates Insurance Recovery FY07 Profit 10

11 Other Profit Analysis (Amounts in millions) $150 $53 3 $132 $75 $2 $10 ($20) $9 $0 FY06 Profit Food and Feed Ingredient Margin Financial Margin Costs Equity Earnings of Affiliates Sale of Arkady Food Ingredients Other FY07 Profit 11

12 Corporate (Amounts in millions) $50 ($57) ($37) $28 ($24) $9 $7 -$100 FY06 Investment Income LIFO Security Gains Other FY07 12

13 Summary of Financial Condition (Amounts in millions) Mar 31 Jun 30 Inc (Dec) INVESTED CAPITAL Working capital $ 8,156 $ 6,291 $ 1,865 Property, plant and equipment 5,823 5, Investments in affiliates 2,051 1, Long-term marketable securities 1,175 1, Other non-current assets 1,059 1,054 5 $ 18,264 $ 15,733 $ 2,531 FINANCED BY Short-term debt $ 1,143 $ 549 $ 594 Long-term debt 5,229 4,130 1,099 Deferred liabilities 1,213 1,247 (34) Equity 10,679 9, $ 18,264 $ 15,733 $ 2,531 13

14 Capital Projects Update Location / Project Scheduled Completion Date Mexico, Missouri JV Biodiesel Plant Velva, North Dakota Biodiesel Plant Rondonopolis, Brazil Biodiesel Plant Clinton, Iowa Co-Generation Plant Dec 06 July 07 August 07 October 07 October 08 Decatur, Illinois Propylene/Ethylene Glycol Plant Hazelton, Pennsylvania Cocoa Plant Columbus, Nebraska Ethanol Plant Clinton, Iowa PHA Plant Columbus, Nebraska Co-Generation Plant October 08 March 08 November 08 December 08 December 08 Jan 09 Jan 07 (Cedar Rapids, Iowa Ethanol Plant - Permitting in process) Completion Date Phase I Jan 08 Jan 09 14

15 Cash Flow Highlights (Amounts in millions) Operations Net earnings Depreciation Deferred taxes Pension and postretirement accruals (contributions), net Changes in working capital Other Investing activities Purchases of property, plant and equipment Business acquisitions Marketable securities Other Financing Activities LT debt net borrowings (payments) ST debt net borrowings (payments) Dividends Share repurchase Other Increase (decrease) in cash Nine Months FY07 $ 1, (1,766) (40) (34) (844) (92) (83) 69 (950) 1, (207) (533) (96) 768 $ (216) FY06 $ (94) (165) (251) (10) 900 (533) (169) (145) (37) (884) (177) $

16 Q&A 16

17 Upcoming Events BMO Capital Markets Agriculture & Protein Conference May 17 Deutsche Bank Global Consumer & Food Retail Conference June 12 Farm Progress Presentation August 28 Prudential Equity Back to School Conference September 5 17

18 Appendix 18

19 Net Assets Third Quarter FY 2007 (Amounts in millions) Quarter Ended 6/30/06 9/30/06 12/31/06 3/31/07 Average Receivables $ 4,471 $ 4,775 $ 5,979 $ 5,805 $ 5,257 Inventories 4,678 5,004 6,287 6,603 5,642 Prepaid Expense Investment in Affiliate 1,986 2,062 1,980 2,051 2,020 Goodwill Other Assets PP&E 5,293 5,379 5,698 5,823 5,548 Accounts Payable (4,014) (4,115) (5,175) (4,872) (4,544) Accrued Expenses (1,521) (1,499) (1,995) (2,215) (1,808) Deferred Liabilities (1,247) (1,253) (1,279) (1,213) (1,248) NET ASSETS $ 11,043 $ 11,822 $ 13,335 $ 13,577 $ 12,444 19

20 Adjusted Earnings Third Quarter FY 2007 (Amounts in millions) Quarter Ended 12 months Ended 6/30/06 9/30/06 12/31/06 3/31/07 3/31/07 Net Earnings $ 410 $ 403 $ 441 $ 363 $ 1,617 Adjustments Investment Income (58) (61) (65) (66) (250) Interest Expense Net (Gain) Loss on Marketable Securities Transactions (12) (4) (7) (13) (36) Total Adjustments Tax on Adjustments Net adjustment ADJUSTED EARNINGS $ 430 $ 423 $ 465 $ 385 $ 1,703 20

21 Cost Per Metric Ton Nine Months FY 2007 Production Volume (000s Metric Tons) 40,323 Total Cost (in 000s) Manufacturing SG&A Total Cost $ 3,461, ,000 $ 4,363,000 Cost Per Metric Ton Produced Manufacturing SG&A $ $