Patricia Woertz, ADM chairman and CEO described it as an excellent year, given an “exceptional set of global opportunities”, which also saw flooding in the Midwest shut down an ADM plant.
The CEO was upbeat despite profits slumping by 61 percent for the fourth quarter in 2008, although the figures were skewed by significant after-tax gains on asset sales in 2007, worth $665m.
Net earnings fell from $955m in 2007 for the three months up to June 30, compared to $372m for the same quarter in 2008, which suggest a grim bottom line. And net earnings for the year ending 30 June 2008 decreased 17 percent to $1.8b from $2.2b.
However Woertz stressed that the company had performed well. Fourth quarter revenue soared by 78 percent from $12.21bn in 2007 to $21.78bn. And annual results showed net sales and other operating income increase 59 percent to $69.8b from $44b. ADM said this was mainly due to “higher than average selling prices resulting primarily from increases in underlying commodity costs”.
Woertz said: “Our results reflect our team’s ability to execute our core business… and use our global network to meet market challenges amid very fluid and diverse conditions.
“During this past quarter, our ability to do this was tested when flooding disrupted water supply and rail service throughout the Midwest—and affected our Cedar Rapids plant for much of the month of June.
“Despite a complete seven-day shutdown of the plant, our team quickly leveraged our processing and transportation network - using our trucks to stand in for rail service - to provide uninterrupted supply of product to our customers. By the first of July, Cedar Rapids was brought safely and fully back online.
Woertz added: “Throughout the year, we faced changing market dynamics. We took sensible, focused, short -and long-term actions that strengthened our integrated business portfolio.
“Our assets are well positioned and our people are prepared to seek out and capture value as crop supplies and market needs evolve.”
In June record floods threatened this year's harvest in the Midwest. In the Cedar Rapids area of Iowa, which is North America's top producing corn state, companies including Cargill, Penford, Quaker and Swiss Valley Farms were also forced to close their plants.
Segment results
The asset sales which heavily influenced its segment operating profit for the quarter included Agricore United, its Arkady bakery business, which affected its Agricultural services segment, and a gain related to the exchange of the company’s interest in Chinese joint ventures for shared in Wilmar International. This affected its Oilseed Processing segment. Although ADM said this was partially offset by continuing strong global demand for protein meal and vegetable oil increasing operating margins.
However, its Corn Processing operating profit increase due primarily to “increased ethanol sales volumes and higher average selling prices of sweeteners and starches”.
Despite this, ADM boasted of segment operating profits hitting a new record of $ 3.4b for the year, up $ 280 million from 2007 due principally to improved operating results of Agricultural Services and crushing and origination earnings in Oilseeds Processing.
An ADM spokeswoman told FoodNavigator-USA.com: “Because of the one-time gains last year, our overall profits were down relative to last year. We highlighted the segment operating profits because we thought it was important to note that our business operations turned in great results even though our relative bottom line might not have shown it.”