ADM to cut global workforce by 3%
Jan. 11, 2012
by Eric Schroeder
DECATUR, ILL. — Archer Daniels Midland Co. has unveiled plans to streamline its organizational structure, including reducing its global workforce by about 3% to enhance the cost structure of the company.
Approximately 1,000 positions, primarily salaried, will be eliminated, the company said. To help achieve the reduction, ADM said it will offer a voluntary early retirement incentive in the United States.
ADM said it expects the job cuts and early retirement incentive, in concert with other targeted cost reductions, will reduce its annual pre-tax expenses by more than $100 million after it is implemented fully.
“To ensure that we can continue to compete effectively in our global markets, we are taking actions to streamline our organization and achieve significant, sustained cost reductions,” said Patricia Woertz, chairman and chief executive officer. “These actions will help us enhance our productivity and earnings power.”
The company hopes to achieve a significant portion of the position reductions through the voluntary retirement incentive and will offer severance and outplacement assistance to other affected employees.
ADM said it expects to record a $50 million to $75 million pre-tax charge related to the reductions during the third quarter (January through March) of fiscal 2012. The company expects to begin benefiting from the cost reduction actions in the fourth quarter of fiscal 2012, with the full benefit recognized by the end of the third quarter of fiscal 2013.
“These decisions do not reflect on the talent or dedication of our ADM team,” Ms. Woertz said. “They reflect our confidence that we can streamline our organization while maintaining our ability to grow profitability, as well as our commitment to customers and to operational excellence.”
Net income at ADM in the first quarter ended Sept. 30, 2011, was $460 million, equal to 68c per share on the common stock, up 33% from $345 million, or 54c per share, in the first quarter of fiscal 2011. The increase primarily reflected a LIFO (last-in, first-out) gain of 11c per share and a 1c per share in debt exchange costs. Excluding the gain, ADM’s adjusted earnings per share were 58c, down 13% from 67c per share a year ago.
Net sales in the first quarter were $21,902 million, up 30% from $16,799 million in the same period a year ago.
ADM’s announcement comes after Minneapolis-based Cargill on Dec. 2, 2011, said it would reduce its global workforce by 2,000, equating to about 1.5% of its 138,000 employees worldwide. Cargill said its move reflected “the continued weak global economy” and is part of a broader effort to reduce expenses and simplify work processes.