ADM reveals growth strategy for food and fuel

By staff reporter

- Last updated on GMT

Related tags: Archer daniels midland, Adm

Ingredients giant Archer Daniels Midland (ADM) has announced a
global growth strategy designed to boost its position in
agricultural processing, including expansion in its cocoa
processing business.

The move comes together with a major push to its BioEnergy business, which ADM hopes will position it as the global leader in the field, the firm recently told analysts in Chicago.

The announcement, which follows a solid start to its first financial quarter this year, is an attempt to "capitalize on the exceptional opportunity ahead"​, as global demand increases for both food and fuel, said ADM president and chief executive officer Patricia Woertz.

"We are implementing a strategic program that will drive both long- term growth and returns by capitalizing on our global strengths and the changing dynamics of the global energy and food markets,"​ Woertz said.

"We see our company distinguished by five global core strengths: our origination, storage and transportation operations across the supply chain; our global agricultural processing footprint; our diversified product portfolio; our experienced management team; and our financial strength to manage for returns and growth through business cycles,"​ she added.

The firm identified three strategic areas that it said offer the highest potential for significant, value-added growth: expansion of the geographic scope of its core model, diversification of its feedstocks and growth of its BioEnergy business. Key to the growth drive will be technology and innovation.

ADM also said it is considering growing its cocoa processing investment in China and increasing origination capacity in Brazil.

The company is also considering expanding its origination presence in palm in Indonesia, sugar in Brazil and other carbohydrates around the world for the production of biofuels. Already announced BioEnergy plans include expansion of biodiesel production capacity in the United States, Brazil and Germany, as well as an increase of 50 percent in U.S. ethanol production capacity.

Woertz said that ADM's growth strategy - and ongoing operations - will be supported by strategic focus areas and management initiatives to align people, processes and investments toward achieving the company's goals. The initiatives include: capital investment screening; project management; performance metrics; development milestones; and performance-based compensation.

Earlier this month the firm revealed that earnings had more than doubled in its first quarter, with its performance boosted by improved market conditions and price increases for some of its primary products.

The agricultural processing firm reported net earnings of $403m for the quarter ended September 30 2006, a massive 116 percent increase from last year's figure of $186m. Net sales for the period stood at $9.4bn, a 10 percent increase from last year's figure of $8.6bn.

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