At CAGNY Conference, ADM Outlines Strategies to Boost Earnings Power
- Enhancing crop sourcing, processing and transportation networks to serve growing demand
- New partnerships with Wilmar International Limited leverage both companies’ strengths
- Strong balance sheet provides operational and investment flexibility
BOCA RATON, Fla., Feb. 21, 2012 – In a presentation today at the annual meeting of the Consumer Analyst Group of New York, Archer Daniels Midland Company (NYSE: ADM) leadership outlined the actions the company is taking to boost earnings power and drive future earnings growth.
Chairman and CEO Patricia Woertz said ADM’s business strategies are designed to capitalize on the opportunities presented by the world’s growing, more prosperous population, particularly in Asia. “To supply growing demand for agricultural products, the world will need more crops and global networks that can connect those crops with growing markets,” explained Woertz. “ADM is expanding our operations and transportation network to meet those needs.”
Woertz also discussed how the company is positioning for long-term growth and success. “We are investing to build upon our proven core model. We have a great management team and a track record of excellent risk management. With our strong balance sheet, we can grow our business to serve growing needs.”
ADM is also enhancing its collaboration with Wilmar International Limited, Asia’s largest agribusiness. Executive Vice President and Chief Operating Officer Juan Luciano announced that the companies had signed a memorandum of understanding to collaborate in purchasing and distribution opportunities in the global fertilizer business; the utilization and management of ocean freight assets; and the optimization of their tropical oil refining operations in Europe.
Luciano also discussed how ADM is driving improvements to grow profits. “We continue our pursuit of operational excellence, which will help grow our competitive advantage. We have enhanced our capital allocation program, improving the process, analysis and strategic focus, resulting in a clearer sense of how our investments—individually and in aggregate—will drive returns. We are managing our business portfolio, growing businesses that are seeing results, and reevaluating businesses and operations that aren’t.”
Senior Vice President and Chief Financial Officer Ray Young remarked, “ADM has had a track record of growing earnings over the past 10 years. Recently, we have seen this growth rate slow, and this is a concern on our part. So, all the actions that we have recently been taking are meant to boost the earnings power of our company,” while achieving returns on capital consistent with ADM’s objective.
Young said ADM’s balance sheet is a source of competitive strength and provides the company with tremendous flexibility, both in managing through crop price and credit market volatilities and in making opportunistic acquisitions. He also said the company’s track record of cash flow generation and earnings growth has allowed ADM to increase its dividends annually recently.
Woertz provided an update on the ongoing workforce reduction, noting that the company currently projects annual pretax savings from these measures and other targeted cost reductions to be more than $125 million. She said that, on its third-quarter earnings conference call, the company would further update the savings number and the charge related to the reorganization.
Closing the presentation, Woertz said, “ADM has a sound strategy, a strong balance sheet, a drive to improve, and a focus on delivering returns for our shareholders.”
Presentation Available for Download
A webcast of the presentation can be viewed, and the presentation document can be downloaded at www.adm.com/webcast.