Live blogging: ADM conference call on quarterly profit plunge

Archer Daniels Midland, the giant grain processor, stunned investors with a fiscal second quarter profit plunge of 89 percent. In a statement, CEO Patricia Woertz said it was “a tough quarter” for the company in a challenging operating environment.  Kimberly Elsham live-blogs the company’s conference call:


Pat Woertz, CEO, giving closing remarks.


ADM on 3 percent workforce reduction: “Majority of that will be at the SG&A lines or corporate or administrative positions.” Will happen over the next 9 to 12 months.


ADM on whether it will close other plants: ” We’re still in the mode of adjusting capacity.”


ADM on South American crop harvest: “It’s going to be lower than we said six weeks ago for certain.”


Regarding biodiesel: “We are starting to see better business interest through margins still aren’t great.”


Juan Luciano, exec VP: “I think the driving season in U.S. will pick up. I think exports with ethanol prices will pick up. I think smaller players will adjust their capacity. There’s a semi-annual shutdown for these plants. Probably at the end of this quarter we should see a little pick up in ethanol.”


Projecting about 75 percent of total projected capex to be invested in smaller businesses for FY2012.



About rapeseed crop in Europe: “Even when new crop comes, we will need some imports from Australia to compensate.”


About cocoa losses: Cocoa bean prices fell 20 percent in last quarter. ADM hesitant to give timeline when cocoa performance will turn around because of this volatile commodity.


About PHA write down: “It’s truly a change in the last review.”


ADM: “It’s a weather market for this quarter. Despite the improvement, we see a softness overall in oilseeds.”


ADM why thinks international merchandising performance was down: “We’ve seen less opportunity.”


On whether Russia considering export duty on grains. ADM: “Comes down to politics. We do have some potential in… Eastern Europe production. At this point it’s all conjecture, but they could bring opportunities.”


About ADM‘s choice to terminate PHA activity: Uncertainty around earnings potential. Many low earnings were hit by the PHA business losses. Will evaluate other ventures.


ADM says it is investing in international business in bioproducts and other segments to help mitigate domestic earnings losses.


About million of its .4 million in inventory is reportedly ready to go to market.


Bought back 7 million in stock in the first six months of its fiscal year 2012, in to returning dividends to shareholders.


Tough quarter: Returning capital to shareholders. Operating environment changing. Lower results in corn, oilseeds operating margins and poor international merchandising results.


About corn: South American harvest forecasted smaller, but ADM expects it to keep production steady. Might look to increase U.S. exports.  Also expecting high fructose corn syrup to boost margins in the future.

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