DECATUR, ILLINOIS, U.S. — Archer Daniels Midland Company (ADM) on Aug. 3 reported net earnings of $1.9 billion and segment operating profit of $3.2 billion for the year ended June 30, up $246 million and $786 million, respectively, from the prior year. For fiscal year 2010, ADM earned $3 diluted EPS, versus $2.62 for the year prior.
For the quarter ended June 30, net earnings increased $388 million to $446 million, and segment operating profit increased $591 million to $799 million from the company’s totals for the same period one year earlier.
ADM earned 69¢ diluted EPS for the fourth quarter, versus last year’s 9¢ fourth quarter.
Profit in ADM’s oilseeds processing segment increased $132 million due to improved margins and higher volumes.
Corn processing profit increased $151 million on stronger bioproducts results.
In the agricultural services segment, profit increased $195 million as ADM saw a good global supply of grains and oilseeds and modestly improving demand, particularly in Asia.
Other business units’ operating profit increased $113 million, reflecting improved results of ADM’s cocoa and flour milling operations and of equity investee Gruma S.A.B. de C.V.
"The ADM team finished strong, capping a very good year with very good fourth-quarter performance," said Chairman of the Board and Chief Executive Officer Patricia Woertz. "As we begin our new fiscal year, our large projects are nearly finished, and we commit to use our strong balance sheet and cash flow to deliver shareholder value."
Net earnings for the fourth quarter increased $388 million due to a $591 million pretax increase in segment operating profit, partially offset by higher corporate expense and a $111 million increase in income tax expense. Income tax expense increased due primarily to higher pretax earnings. Last year’s fourth quarter income tax expense included favorable currency-translation impacts, partially offset by charges related to the restructuring of ADM’s investment in Wilmar International, Ltd.
For the full fiscal year, net earnings increased $246 million due to a $786 million pretax increase in segment operating profit, partially offset by higher corporate expense which included a $296 million after-tax negative impact from changing LIFO inventory valuations. The Company’s effective income tax rate for the year declined to 25.8%, compared to 32.5% for the year prior, mostly due to the absence of last year’s $158 million charge related to the restructuring of ADM’s investment in Wilmar International, Ltd.
Profit in ADM’s oilseeds processing segment increased $132 million for the quarter and $120 million for the 12 months.
Crushing and origination results increased $77 million to $218 million for the quarter. Year-over-year crushing volumes increased in the quarter, with decreased North American volumes more than offset by increases in South America and Europe. Good positioning favorably impacted North American and European soybean and softseed crushing margins.
Refining, packaging, biodiesel and other results increased $58 million to $79 million for the quarter. Recently expanded biodiesel production capacity at Rondonopolis, Brazil, allowed ADM to capture good margins and volumes amidst strong demand. Last year’s quarter also included charges related to the formation of the Stratas Foods packaged-oil joint venture.
Asia results of $62 million for the quarter reflect ADM’s share of Wilmar International, Ltd. earnings.
Corn Processing results increased $151 million for the quarter and $537 million for the 12 months.
Sweeteners and starches operating profit decreased $30 million from the prior year to $119 million. This decrease reflects lower average selling prices that were only partially offset by lower net corn costs. Sales volumes increased due to strong export demand.
Bioproducts profit in the quarter was up significantly from last year’s loss due to better ethanol and lysine margins.
At present, ADM has begun production at its Cedar Rapids, Iowa, U.S., ethanol dry mill, which should be fully operational by the end of August. And, in Decatur, Illinois, U.S., the company is working through startup issues at its propylene glycol plant, which should be fully operational by end of the calendar year.
Agricultural services results increased $195 million for the quarter and decreased $326 million for the 12 months.
In the quarter, ADM saw a good global supply of grains and oilseeds and modestly improving demand, especially from Asia.
Merchandising and handling profit improved significantly due principally to more favorable risk management results. Earnings from transportation operations declined on lower barge-freight rates and higher fuel costs.
Results from ADM’s other business units increased $113 million for the quarter and $455 million for the 12 months.
Other processing businesses were up $108 million for the quarter, reflecting improved results of ADM’s cocoa and flour milling operations and from equity investee Gruma S.A.B. de C.V. Other processing earnings for the quarter include mark-to-market gains of $63 million related to certain forward sales commitments accounted for as derivatives.
Other financial results in the quarter increased $5 million due primarily to the absence of losses experienced last year in managed fund investments.
Corporate results decreased $95 million for the quarter and $701 million for the 12 months. Rising commodity prices generated a $23 million increase in ADM’s LIFO inventory valuation reserves this quarter, compared to a $54 million increase a year ago. For the year, LIFO inventory valuation reserves decreased $42 million, compared to a $517 million decrease last year. The quarter and 12 months include $59 million of unrealized loss on interest rate swaps. The 12 months include higher net interest expense of $91 million and debt buyback costs of $75 million.