ADM Outlines Growth Agenda at CAGNY Conference
Global agricultural processor Archer Daniels Midland Company (NYSE: ADM) said today that, while the Company is not immune to the effects of the current economic downturn, its strong balance sheet, global asset base, industry acumen, and expertise in risk- and cost-management are enabling ADM to execute its growth strategy.
“Our disciplined approach to controlling our expenses, optimizing our balance sheet, and managing through uncertainties in the marketplace has served us extremely well through many business cycles,” said Chairman, CEO and President Patricia Woertz at the Consumer Analyst Group of New York’s annual conference in Boca Raton, Fla.
“Aided by the intelligence our global network provides, we effectively navigate global markets and maintain strong asset flexibility,” Woertz added. “[We have] the ability to shift production into our most profitable end markets and move product globally along the most profitable trade routes. This is one of our most compelling strengths, differentiating ADM even further in today’s market.”
Executive Vice President and Chief Financial Officer Steve Mills noted that ADM’s net earnings and segment operating profits for the first six months of the 2009 fiscal year represented first-half Company records. This strong performance during a volatile period, he said, was due in part to the diversity of the Company’s business portfolio, which encompasses the processing of oilseeds, corn, wheat, cocoa and other crops, as well as the merchandising, handling and transportation of agricultural commodities and finished products. “[This] mix gives us the ability to grow Company earnings as market conditions change,” Mills said.
Woertz outlined ADM’s three-part growth strategy, which focuses on expanding volumes and the scope of its value chain in three ways: diversifying feedstocks, expanding the Company’s geographic footprint, and expanding its product lines to respond to demand from food, feed and bioenergy customers. She said the Company was diversifying its base of feedstocks through projects like a recently announced joint-venture in Brazil to produce ethanol from sugarcane.
Executive Vice President, Commercial and Production, John Rice discussed ADM efforts to extend the Company’s geographic reach and expand its overall capacity: “While our asset base is well-suited to handling today’s crops, we are expanding our network in anticipation of greater volume that will result from the cultivation of new land, and the implementation of advanced technology and better farming practices.”
Rice continued, “We are adding to our elevator network. In recent months, we have acquired, leased or expanded operations around the world to support increased corn, wheat, rapeseed and soybean origination activities. At the same time, we are continually improving elevator operations to increase throughput and lower our operating costs. We are also upgrading our export and import capabilities to enable more efficient loading and unloading of vessels, which will reduce demurrage costs, increase dispatch revenue, and increase our barge utilization. We are expanding our South American barge fleet by 50 percent to improve our sourcing capability in this growing region. And, we are growing our destination business, in which products are priced to our customers on a delivered basis, and we have opportunities to capture additional value from our integrated transportation network.”
With regard to expanding the Company’s product line, Woertz said ADM’s existing scale in corn wet milling and oilseeds processing offered high-value bioenergy opportunities. In addition to new ethanol plants, she noted that ADM had opened new biodiesel production facilities in North Dakota and Brazil, and that an ongoing collaboration with ConocoPhillips was focused on turning biomass such as corn stover, switchgrass and wood waste into biocrude, a nonfossil petroleum replacement that can be processed in traditional refineries.
Mills said that ADM’s strong financial standing presented a number of promising avenues for growth. ADM, he noted, has maintained an A/A2 credit rating with a Tier 1 commercial paper capacity of $4.2 billion.
Said Woertz: “We know that our long term volumes and opportunities will grow, as the world will need more food, feed and renewable energy and industrial products. So while we will work through the short-term challenges the economy brings our way, we remain focused on identifying opportunities to grow our value chain.
“As we see continuing depressed valuations across the agricultural space, we recognize a greater number of opportunities available to us to grow through selective acquisition,” she added. “We intend to pursue our opportunities with an enduring commitment to build shareholder value.”
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