Archer-Daniels-Midland Company (NYSE:ADM) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 09:00 am ET


Archer-Daniels-Midland Company (NYSE:ADM) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Archer Daniels Midland Company's Fourth Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's call, Christina Hahn, Vice President, Investor Relations for Archer Daniels Midland Company. Ms. Hahn, you may begin.

Christina Hahn

Thank you, Stephanie. Good morning and welcome to ADM's fourth quarter earnings call. Starting tomorrow a replay of today's call will be available at For those following the presentation, please turn to Slide 2, the company's Safe Harbor statement, which says that 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.

These statements are based on many assumptions and factors that are subject to risks and uncertainties. ADM has provided additional information in its report on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC reports. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements as a result of new information or future events.

On today's call, our Chief Executive Officer, Juan Luciano, will provide an overview of the quarter. Our Chief Financial Officer, Ray Young, will review financial highlights and corporate results. Then Juan will review the drivers of our operations performance in the quarter and provide an update on actions that are improving returns. And then they will take your questions. Please now turn to Slide 3. And I'll now turn the call over to Juan.

Juan Luciano

Thank you, Christina. Good morning, everyone, thank you all for joining us today. This morning, we reported adjusted earnings per share of $1 and adjusted segment operating profit of $1.1 billion. Our net earnings for the fourth quarter were $701 million or $1.08 per share. Segment operating profit was $1.3 billion. For the calendar year, we achieved adjusted earnings of $3.20 per share, up 37% from last year's $2.33. And importantly, adjusted ROIC of 9% was 260 basis points above our cost of capital. In the fourth quarter, the Agricultural Services team executed well to capitalize on strong conditions, while international merchandising continued to show year-over-year recovery.

In North America and Europe Oilseeds showed strong year-over-year growth offset by weaker results in South America. Looking ahead in North America and Europe, solid crush margins and export opportunities have carried into the first quarter. Market conditions in South America Oilseeds should improve with the large harvest, and we are working towards higher returns throughout 2015 in this key geography. While US ethanol demand was seasonally strong, boosted by the domestic response to lower gasoline prices, high industry production has built excess inventories.

Margins in this industry should remain challenged until supplies are better aligned with demand. We will continue our work to