Generative AI - Gitex v1Generative AI - Gitex v1.pptx
ADM Latest Analyst Presentation.
1. Vital to the World
Corn Processing Business Review
And Plant Tour
Patricia Woertz – Chairman, CEO and President
Steve Mills – EVP & CFO
October 7, 2008
John Rice – EVP, Commercial & Production
Ed Harjehausen – SVP, Global Corn
Randy Kampfe – VP, Corn Processing
Dwight Grimestad - VP, Investor Relations
4. Safe Harbor Statement
Some of our comments constitute forward-looking statements that
reflect management’s current views and estimates of future economic
circumstances, industry conditions, company performance and
financial results.
The statements are based on many assumptions and factors, including
availability and prices of raw materials, market conditions, operating
efficiencies, access to capital and actions of governments. Any
changes in such assumptions or factors could produce significantly
different results. To the extent permitted under applicable law, the
Company assumes no obligation to update any forward-looking
statements as a result of new information or future events.
4
5. Agenda for the Day
8:00am Overview Presentation: Strategy and Execution;
Patricia Woertz - Chairman, CEO and President
Financial Performance and Capital Expenditures;
Steve Mills - EVP and CFO
Recent Trends Shaping Global Grain Supply, Demand and Prices;
John Rice - EVP, Commercial and Production
**Q&A
Break
8:55am Corn Processing Business Review;
Ed Harjehausen - SVP, Global Corn
Corn Operations Review;
Randy Kampfe - VP, Corn Processing
**Q&A
10:00am Cedar Rapids Plant Tour; Doug Brakhan - Plant Manager
12:00pm Wrap-up Q&A and Lunch; ADM Management Team
1:30pm Conclusion
5
6. Overview Presentation:
Strategy and Execution
Pat Woertz – Chairman, Chief Executive Officer and President
8. Our World-Class Asset Base Is Positioned
for Global Growth
Sourcing facilities
Oilseed processing
Corn processing
Cocoa & wheat processing
Sourcing distribution
Processing distribution
8
9. We Have Leveraged our Value Chain and
Executed on our Strategy
The ADM Value Chain
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
COCOA INDUSTRIAL
9
10. We Have Diversified Feedstocks
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
COCOA INDUSTRIAL
Diversify
Feedstocks
• Palm
• Sugar
• Biomass
10
11. We Have Expanded the Geographic Scope of
our Core Model
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
COCOA INDUSTRIAL
Expand Geographic
Scope of Core Model
Diversify •Rapeseed crushing in Germany
Feedstocks •Cocoa plants in U.S. and Ghana
•Origination, transportation network in U.S.
11
12. We Have Grown our BioEnergy Business
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
COCOA INDUSTRIAL
Grow
BioEnergy Business
Expand Geographic
Diversify
Scope of Core Model •Completing BioEnergy facilities
Feedstocks
•Pursuing innovative research with
partners
12
13. We Have Reduced Water Consumption
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
Diversify Expand Geographic Grow
Feedstocks Scope of Core Model BioEnergy
COCOA INDUSTRIAL
Business
Technology and Innovation Drive Growth
Reduced Water Consumption
13
14. We Are Building Efficient Cogen Plants
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
Diversify Expand Geographic Grow
Feedstocks Scope of Core Model BioEnergy
COCOA INDUSTRIAL
Business
Technology and Innovation Drive Growth
Reduced Water Consumption Cogeneration
14
15. We Are Continuing Advanced Biofuels Research
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
Diversify Expand Geographic Grow
Feedstocks Scope of Core Model BioEnergy
COCOA INDUSTRIAL
Business
Technology and Innovation Drive Growth
Reduced Water Consumption Cogeneration Advanced Biofuels
15
16. We Use Technology and Innovation to
Meet Customer Needs
CORN FOOD
SOURCING TRANSPORTATION PROCESSING DISTRIBUTION SALES
OILSEEDS FEED
WHEAT FUEL
Diversify Expand Geographic Grow
Feedstocks Scope of Core Model BioEnergy
COCOA INDUSTRIAL
Business
Technology and Innovation Drive Growth
Reduced Water Consumption Cogeneration Advanced Biofuels
Customer Needs
16
17. We Have Driven Improvements in Key
Priority Areas…
• Safety • Continuous Learning
• Leadership
• Cost Management
• Communication
• Project & Capital Discipline
• Metrics
…and Set New Priorities
• Safety
• Cost Management
• Performance
• Sustainability
17
18. We Are Advancing the Understanding that
Agriculture Can and Will Meet Global Demands
18
19. Financial Performance and Capital Expenditures
Steve Mills - Executive Vice President and Chief Financial Officer
20. We Achieved Record Segment Operating
Profit in 2008
(Amounts in millions, except for per share data and percentages)
Year ended
FY08 FY07 % Change
Net sales and other operating income $ 69,816 $ 44,018 59%
Segment Operating Profit 3,441 3,161 9%
Net earnings 1,802 2,162 (17%)
Diluted earnings per share $ 2.79 $ 3.30 (15%)
20
21. Our Diversified Portfolio Drives Earnings Growth
FY06 FY07 FY08
Oilseed Processing Corn Processing Other
Ag Services
Sweeteners & Merchandising & Wheat, Cocoa, Malt
Crushing & Origination
Starches Handling
Refining, Packaging, Financial
Bioproducts
Biodiesel & Other Transportation
Asia
21
22. Our Diversified Portfolio Drives Earnings Growth
FY06 FY07 FY08
Oilseed Processing Corn Processing Other
Ag Services
Sweeteners & Merchandising & Wheat, Cocoa, Malt
Crushing & Origination
Starches Handling
Refining, Packaging, Financial
Bioproducts
Biodiesel & Other Transportation
Asia
22
23. Our Balance Sheet Reflects the Impact of Increased
Commodity Prices and our Capital Construction Projects
June 30 June 30
2008 2007
Invested Capital
W orking capital $ 14,189 $ 7,787
Net property, plant and equipment 7,125 6,010
Investment in affiliates 2,773 2,498
Long-term marketable securities 590 657
Other non-current assets 1,113 831
$ 25,790 $ 17,783
Financed By
Short-term debt $ 3,123 $ 468
Long-term debt 7,922 4,817
Deferred liabilities 1,255 1,245
Equity 13,490 11,253
$ 25,790 $ 17,783
23
24. Major Construction Projects Are on Schedule
Current Timeline*
Project
Plant Location – Project Phase I Completion
Columbus, NE – Ethanol Q309
Cedar Rapids, IA – Ethanol Q110
Clinton, IA – Co-Generation On-line Q109
Columbus, NE – Co-Generation Q309 Q409
Clinton, IA – PHA Q209
Hazleton, PA – Cocoa On-line Q309
Decatur, IL – Propylene/Ethylene Glycol Q309
Total Projected Costs $2.6B
*Calendar Year
24
25. Recent Trends Shaping Global
Grain Supply, Demand and Prices
John Rice - Executive Vice President, Commercial and Production
26. World Meat and Grain Consumption Is Growing
(Amounts in millions of tons)
2007/08 1988/89 % Change
Population 6.7B 5.2B 29%
26
27. World Grain and Oilseeds Production Is Growing
Area Production
27
28. High Crude Oil Prices Impact Crop Prices
(Amounts in U.S. dollar/barrel)
28
31. Increased Crop Production Is Projected for 08/09
• Wheat production to increase by 65M tons
• Oilseeds production to rise by 27M tons
• Coarse grains production to grow by 11M tons
Source: USDA
31
33. ADM Is Positioned to Respond to a
Changing Marketplace
• Proprietary crop intelligence offering insight into world
grain markets and flows
• Transportation network spanning five continents
• Versatile, responsive processing facilities
• Ability to reformulate rations to produce cost-effective
feeds based on current commodities prices
33
34. ADM Provides Alternatives to Optimize
Swine Feed Formulas
Corn Amino Acids Canola Wheat Barley
SBM Vit & Min Fat Wheat Midds Milo
Meat & Bone Meal Bakery Meal DDGS Rapeseed Meal
34
35. ADM Provides Alternatives to Optimize
Poultry Feed Formulas
Corn Amino Acids Canola Wheat Barley
SBM Vit & Min Fat Wheat Midds Milo
Meat & Bone Meal Bakery Meal DDGS Rapeseed Meal
35
36. ADM Provides Alternatives to Optimize
Dairy Cattle Feed Formulas
Ration Without Ethanol
Current Ration Based on
Alternative Ration Based on
Coproducts
Available Coproducts
Increased DDGS Availability
Similar to 1990’s
Protein Supplements Cottonseed Alfalfa Hay DDGS
Soybean Hulls Corn Grain Wheat Midds Canola Meal
Cottonseed Hulls Corn Silage CGFP Citrus Pulp
36
37. Q&A
ADM Strategy and Execution
Financial Performance and Capital Expenditures
Crop Dynamics
37
40. Corn Processing Business Review
• Fundamentals
• New Product Development
• Issues
• Strengths
40
41. ADM’s Diversified Product Line
Maximizes Value
• 2.0 million bu/day
• 7 U.S. plant locations
• Maximize returns by
allocating grind to different
products that make the
most financial and
strategic sense
• Will continue to develop
new value-added products
that effect product mix
41
42. Joint Ventures Are Positioned for
International Opportunities
Slovakia
Hungary
Romania
Bulgaria
Turkey
Guadalahara
42
44. We Produce 24 Products from Corn
CORN SYRUP, HIGH FRUCTOSE CORN SYRUP
Dextrose (Liquid and Crystalline), Maltodextrin
Starch
Xanthan Gum, Citric Acid, Lactic Acid, Yeast
Sorbitol (Liquid and Crystalline)
Propylene Glycol, Ethylene Glycol
Lysine, Threonine, Astaxanthin
FUEL ALCOHOL
Corn Oil
Food and Industrial Starches
Gluten Feed
Ethyl Lactate
Gluten Meal
PHA (biodegradable plastic)
Additional Products
44
45. ADM Has Leading Positions in Key Markets
1st 2nd 3rd
Total Grind Cargill Tate & Lyle
HFCS Cargill Tate & Lyle
Syrup Cargill Tate & Lyle
National Starch
Starch Tate & Lyle
& Chemical
Aventine
Ethanol Poet Renewable
Energy
45
46. HFCS Remains an Attractive Alternative to Sugar
• U.S. market – 23.5 billion pounds, slightly declining volume
• Mexico volumes – up over last year
• ADM has approximately 30-35% market share
• Beverages account for 70% of HFCS usage
• Price differential between sugar and fructose has grown
46
47. U.S. Ethanol Demand and Supply Are Growing
20
Days
*Calendar Year
Source: Energy Information Administration
47
48. Ethanol Demand Exceeds RFS Requirements
*Calendar Year
Source: Energy Information Administration
48
52. Brazilian Ethanol Export Capacity Is Limited
(Amounts in millions of gallons, except for percentages)
Import to U.S. 2007 2008 Est. 2009 Est. 2010 Est.
Caribbean 354 495 675 740
Direct 85 46 0 0
TOTAL 439 541 675 740
US Market 6,600 9,000 10,500 12,000
% of US Market 6.65% 6.01% 6.43% 6.17%
*Total export capacity 1.5 billion gallons/year
*2008 estimates non-U.S. CBI exports - 475 mmg
Source: F.O. Lichts , The Kingsman
52
53. New Products Offer Opportunities to
Increase Value from Grind
Commercialization in progress
• Telles JV between ADM and Metabolix
- Biodegrades in soil and marine environments
- Heat resistant
• Glycols
53
54. Industrial Chemicals Offer Growth
Potential for the Future
• Focus on direct chemical replacements
- Based on ADM feedstocks
- Low cost position possible
- Initial focus on North America
- High growth market or market support for bio-based
- Increases speed-to-market
• License external process technology where necessary
• Develop partners for specialty chemicals where
performance knowledge is required
54
56. HFCS Is the Same as Table Sugar
• “It's basically no different from table sugar. Table sugar is
glucose and fructose stuck together. Corn sweeteners are
glucose and fructose separated. The body really can't tell
them apart ...”
- Dr. Marion Nestle, Paulette Goddard Professor of
Nutrition, Food Studies, and Public Health, New York
University
• “If there was no high-fructose corn syrup, I don't think we
would see a change in anything important.”
- Dr. Walter Willett, Chairman of the Nutrition
Department, Harvard School of Public Health
56
59. DDGS Are an Effective Feed Ingredient
CHICKENS
• “I’m very enthusiastic about using DDGS in poultry diets. We use it just like other
ingredients that are available. And as the ethanol Industry has grown, there are more
and more tons of DDGS, and we’ll continue to use it”
- Philip Smith, Poultry Nutritionist, Tyson Foods, Inc.
TURKEYS
• “Current feeding trials have examined the use of low and moderate levels of distillers
dried grains with solubles in broiler and turkey diets. In market tom turkeys, up to 20%
DDGS in grow/finish diets is possible in diets with normal protein content and when feed
intake is not limited.”
- Dr. Sally Knoll, Professor, University of Minnesota Extension Service
SWINE
• “The Maschhoffs Inc. feed DDGS at up to 30% in some swine rations. At current
commodity prices DDGS is very competitive and allows for the replacement of corn,
soybean meal, and monocalcium phosphate. ”
- Aaron Gaines, The Maschhoffs Inc.
59
60. Food Prices Are Driven by Energy Costs
• “During the first four months of 2008, the all food CPI increased
by 4.8 percent, with increased ethanol and biodiesel
consumption accounting for only about 4-5 percent of the total
increase, while other factors accounted for 95-96 percent of the
increase.”
- U.S. Dept. of Energy, U.S. Dept. of Agriculture
• Increasing petroleum prices have about twice the impact on
consumer food prices as equivalent increases in corn prices.
- USDA Economic Research Service
• Food travels on average 1,500 miles before it gets to the retail
establishment.
- National Farmers Union
60
61. Ethanol Is Keeping Down Gasoline Costs
• “Oil and gas prices would be 15% higher if biofuel
producers weren’t increasing output.”
- Merrill Lynch commodity strategist Francisco Blanch
• “If we had not been blending ethanol into gasoline,
gasoline prices would be between 20 cents and 35 cents
per gallon higher.”
- U.S. Dept. of Energy, U.S. Dept. of Agriculture
61
63. ADM Has Competitive Advantages in
Corn Processing
• Diversification of product mix
• Advantages of combining wet and dry operations
• Cogeneration: steam and power from coal
• Size: first in grind and first or second in major product lines
• Logistics
• Global markets for coproducts
• Grain origination
• Economies of scale
63
71. Cost Control Is Critical to Success
• Cost control is a challenge – especially with the rising
cost of energy
• Efficient use of energy is a key to success, and our
investments in cogeneration are helping mitigate our
costs for steam and electricity
• An on-going Task Force explores projects that affect
cost optimization
• Improvements are being achieved through capital
expenditures to improve efficiencies
71
72. We Are Improving Capital Project Management
Enhancing and improving project management:
- Safety is actively managed with on-site safety pros
- Design once, build multiple times
- Global sourcing used for equipment and materials
- Maximize shop fabrication, minimize field fabrication
- Best practices adopted and shared between projects
- Coordinated management oversight across major projects
- Collaboration between projects for development and
training of production teams
72
73. Cedar Rapids, IA - Adding Ethanol Dry Mill
Dry Mill
Cogen
Wet Mill
Red Star
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X CIP X X X X X X X
73
74. Clinton, IA - Adding Cogen and PHA
PHA
Cogen
Feedhouse
Wet Mill
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X XX X X X X
74
75. Columbus, NE - Adding Ethanol Dry Mill and CoGen
Dry Mill Wet Mill
Cogen
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X CIP X X X X
75
76. Decatur, IL - Our Largest Corn Plant
Propylene
Wet Mill
Glycol
Corp Cogen
BioProducts
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X XX X X X
76
77. Marshall, MN
Wet Mill
Refinery
Ethanol
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X X X X X
77
78. Peoria, IL - Our Largest Dry Mill
Ethanol
Dry Mill
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X X
78
79. Walhalla, ND - Our Smallest Corn Plant
Ethanol
Dry Mill
Process Products
Wet Dry 42 55 CS 97DE Sorb Starch Ethanol Other
X X
79
80. ADM Has Competitive Advantages in
Corn Processing
• Diversification of product mix
• Advantages of combining wet and dry operations
• Cogeneration: steam and power from coal
• Size: first in grind and first or second in major product lines
• Logistics
• Global markets for coproducts
• Grain origination
• Economies of scale
80
83. Tour Security & Safety
1. Proper clothing is mandatory
2. Personal Protective Equipment (hard hats,
safety glasses, ear protection) provided by ADM
3. No cell phones, cameras, pagers, or any other
electronic devices
4. You will be escorted by an ADM employee
5. Be aware of potential slip, trip, and fall hazards
83
84. Tour Security & Safety
6. Be alert for railcars moving on the tracks
(red light and audible horns are warnings)
7. Some production areas have special requirements
which are posted at their entrances
8. The facility is tobacco-free
9. In the event of an emergency your ADM escort will
instruct you where to go
84