Archer Daniels Midland 2007 Annual Report Download - page 36

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28
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Operating profit by segment is as follows:
2006 2005 Change
(In millions)
Oilseeds Processing $ 599 $ 345 $254
Corn Processing
Sweeteners and Starches 431 271 160
Bioproducts 446 259 187
Total Corn Processing 877 530 347
Agricultural Services 275 262 13
Other
Food, Feed, and Industrial 159 263 (104)
Financial 151 151 –
Total Other 310 414 (104)
Total Segment Operating Profit 2,061 1,551 510
Corporate (206) (35) (171)
Earnings Before Income Taxes $1,855 $1,516 $339
Oilseeds Processing operating profits increased $254 million to $599 million primarily due to improved market
conditions in all geographic regions. European processing results improved principally due to strong demand for
biodiesel and abundant rapeseed supplies in Europe. This strong demand for biodiesel in Europe increased
European vegetable oil demand and resulted in improved oilseeds processing results. Abundant rapeseed supplies
in Europe resulted in lower rapeseed price levels. North American processing results improved principally due to
abundant oilseed supplies in the United States and good demand for soybean meal. Vegetable oil values were solid
as the markets anticipate new demand from the developing United States biodiesel industry. South American
operating results increased primarily due to improved origination activities and a $27 million credit for Brazilian
transactional taxes. Operating results in Asia increased due to improved soy crushing margins and improved palm
operations. Operating profits include a $14 million charge for abandonment and write-down of long-lived assets
and a $6 million charge related to the adoption of FIN 47. Operating profits for 2005 include a charge of $13
million for abandonment and write-down of long-lived assets.
Corn Processing operating profits increased $347 million to $877 million primarily due to higher average selling
prices, increased sales volumes, and lower net corn costs, partially offset by increased energy costs. Sweeteners
and Starches operating profits increased $160 million due primarily to decreased net corn costs and higher average
sales prices and sales volumes. Sales volumes and prices have increased primarily due to good demand for
sweetener and starch products. These increases were partially offset by increased energy costs. Sweeteners and
Starches operating profits include a $5 million charge related to the adoption of FIN 47. Bioproducts operating
profits increased $187 million primarily due to higher ethanol sales volumes and average selling prices and
decreased net corn costs, partially offset by increased energy costs and lower lysine average selling prices. The
increases in ethanol sales volumes and average sales prices were principally due to increased demand from gasoline
refiners as refiners used ethanol to replace MTBE as a gasoline additive and from increased gasoline prices.
Bioproducts operating profits include a $6 million charge for abandonment and write-down of long-lived assets, a
$2 million charge related to the adoption of FIN 47, and $6 million of costs related to the closure of a citric acid
plant. Bioproducts operating profits for 2005 include a $16 million charge for abandonment and write-down of
long-lived assets.