ADM Sees Additional Savings of $200 Million by End of 2014

   By Kristin Jones 
 

Agricultural giant Archer Daniels Midland Co. (ADM) said it expects to realize an additional $200 million in savings by the end of 2014, and sees $1 billion in working cash improvements by the end of this year.

The U.S. grain trader and processor said its restructuring and other cost-cutting measures in 2012 have already resulted in savings of $150 million. The additional $200 million is seen coming from cutting down energy and water use, standardizing company processes and inventory controls, as well as other initiatives.

ADM has freed up $1 billion in cash through activities including better inventory management, and expects the next $1 billion to come from similar efforts.

The company recently said that it would proceed with a long-coveted acquisition of Australia's largest grain company, GrainCorp Ltd. (GNC.AU). The $3.5 billion deal is expected to give ADM a crucial foothold for exporting grain to China and the rest of Asia, where strong demand has driven a global commodities boom.

The proposed deal, which is still subject to conditions, led Moody's Investors Service to place the company on review for a downgrade.

ADM said it expects an earnings boost from the acquisition in the first full year, and sees a gain of $49 million to $69 million by the end of the second year based on synergies between the two companies.

Shares rose 2% in recent trading to $34.72. The stock is up 27% since the start of the year.

Write to Kristin Jones at [e-mail]

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