Archer Daniels Midland Trims Capital Spending by $500 Million for 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--Capital spending by agricultural processor and food ingredients provider Archer Daniels Midland (NYSE:ADM) (ADM) (Chicago, Illinois) will total $900 million in 2014, down nearly 36% from its original $1.4 billion spending plan, according to company executives. ADM reported third-quarter net income rose 57% from a year earlier to $747 million on the strength of its Corn Processing, Ag Services and Oilseeds Processing segments. Third-quarter revenues totaled $18.1 billion, down 15% from the same quarter in 2013.

Industrial Info is tracking 38 active ADM projects, with a combined value of $191.5 million. Of these, 24 projects worth $177 million are in the planning phases, and 14 projects worth $15 million are in the construction phases.

With an investment value of $25 million, the animal feed plant addition at Glencoe, Minnesota is the largest ADM project. The company has begun preliminary design work on the project. Kickoff is slated for mid-2015, with completion in second-quarter 2016.

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Ray Young, the senior vice president and chief financial officer of ADM, said during the company's earnings conference call that capital spending for plants, property and equipment totaled $605 million during the first nine months of the fiscal year, compared with $900 million in the same period last year. For the entire year, capital spending will total $900 million, down from the company's original $1.4 billion spending plan. He attributed the spending cut to stronger capital discipline.

Company executives also said they expect ADM to achieve $400 million in operational cost savings this year.

Juan Luciano, the president and chief operating officer of ADM, noted several third-quarter project highlights, including the completion of Beech Grove Flour Mill expansion in Indiana. The expansion was part of a business consolidation, and has resulted in the third-largest flour mill in the U.S., he said. The expansion had a total investment value of $35 million, according to Industrial Info.

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View Project Report - 300090165

During the quarter, ADM's Oilseeds segment saw an operating profit of $366 million, which was similar to the same period a year earlier, the company said. Crushing and origination profit declined, but softseed results improved, driven mainly by European rapeseed margins and volumes. Refining, packaging, biodiesel and other products generated a profit of $96 million, up $11 million, according to the company.

Corn-processing operating profits nearly doubled to $356 million, while Ag Services profits rose 36% to $159 million.

Looking forward, company executives said ADM is working to sell its global chocolates business to Cargill Incorporated (Minnetonka, Minnesota), and it expects to complete the sale of its fertilizers business to The Mosaic Company (NYSE:MOS) (Plymouth, Minnesota) by the end of this year.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.