Agricultural processor Archer Daniels Midland Co
ADM said it will eliminate about 1,000 positions worldwide to enhance the cost structure of the company, estimating the cuts and other cost reductions will eventually reduce its annual pre-tax expenses by more than $100 million.
It joins Cargill
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, ADM chairman and chief executive officer.
ADM faces increasing global competition as other processors are becoming more aggressive about managing costs, spokesman David Weintraub said. The company has never had a global targeted workforce reduction similar to this before and does not plan any further job cuts to control costs, he said
It's too soon to say in which locations and divisions the cuts will take place, Weintraub said. U.S. employees can sign up for voluntary early retirement until the end of the month. After that, the company will assess how to reach the 3 percent target globally, he said.
One division that is struggling is soybean processing, said Ann Gurkin, an analyst for Davenport & Company who follows ADM. Margins for global soybean crushing have been under pressure due to excess capacity, she said.
I think the cuts are in response to the continued tough environment in the soybean business, she said.
ADM's layoffs come on the heels of disappointing results issued on Tuesday by Cargill. The company revealed a third consecutive slump in quarterly earnings and said the quarter ended November 30 was its worst quarter since 2001.
Cargill singled out its trading operations for dragging down stronger earnings in its food and agricultural services divisions, saying Europe's debt crisis had hurt equity and distressed-asset trades in its hedge fund division. Sugar trading also recorded a loss.
(Reporting By Tom Polansek; editing by Jim Marshall and Marguerita Choy)