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Resourceful by Nature:
ADM Executive Showcases Global Resources, Global Interests

Ag products used by ADM: corn, soybeans, cocoa beans.
Margaret Loebl just bought twenty railroad cars for use in Brazil. She's monitoring infrastructure development in that country at the same time that she's thinking about the hedge price of corn and soybeans in the US and international markets.

Margaret Loebl with Finance Chair David Ikenberry.That business today is global, complex, and fraught with risk was made clear during a presentation by Archer Daniels Midland's Margaret Loebl, vice president of finance at the Decatur-based multinational company. An agricultural processor with business interests spanning the globe, ADM's value chain starts with grain acquisition direct from farmers and progresses through oil and meal production to blending and packaging.

The company, with $37 billion in annual sales last year, is working up the value chain, she said in her January presentation to graduate students in the MS in Finance program, noting ADM's recent alliances with chocolate companies in Europe. ADM is the world's largest processor of cocoa and has expanded to blending and producing chocolate and packaging it based on the specifications of various chocolate vendors.

Overall the company's strategic focus is to maintain their market share in key markets, to continue to be low-cost producers, to capitalize on geographic opportunities, and to expand their value-added businesses. Their challenges include trace-ability and food safety, world and regional food preferences, and rebalancing global supply and demand.

From Farmer to Consumer

In its recently unveiled commercials, ADM showcases its new tagline "Resourceful by nature." Loebl is proud of how the company demonstrates its resourcefulness as it coordinates with farmers. "We have to be nimble with farmers to succeed," she said. The company is always searching for efficiencies in its operations around the globe and maximizing its expenditures in research and technology utilization.

The company's resourcefulness also extends to evaluating new markets. Their focus is on China, where the protein needs are expected to grow enormously as the population consumes a more Western middle-class level of protein. Loebl noted that ADM took into account the possibility of future import restrictions making it harder to import processed products into China. That was a key factor in their strategic decision to process beans in several plants in China rather than shipping more processed products to the world's most populous country.

Looking for a Challenge, Looking for Risk

Loebl has been with ADM for several years, coming to the company from footwear giant NIKE and after more than a decade of experience at General Motors. For Loebl, one of the appeals of the job at ADM was the constantly changing environment that she calls dynamic and interesting. Each ADM sector has risks -- such as the weather and the overseas markets -- and that is one of the major challenges Loebl faces each day. "We have to evolve to the footprint we have," she noted. And that is the overall challenge that keeps her engaged and makes and keeps her job interesting.

Loebl says today's challenges are the company's ratings as determined by rating agencies, capital planning, dividend/share repurchase, and overall risk management. ADM's approach to ratings is to determine the rating level that is acceptable to the company and factoring that into their corporate decision-making. Although recently downgraded by several firms, she is satisfied with their current ratings, noting that ADM can still borrow funds at acceptable levels and rates. But she doesn't want their ratings to go any lower.

Developing a long-term financial model based on current and future risks -- more along the lines of textbook examples -- is a new project for Loebl and her staff. Key to making progress is to understand their business from bean to final product, targeting their free cash flow, and pushing down into ADM to make changes to meet their targets.

About the Speaker and ADM

Group Vice President-Finance at ADM, Margaret Loebl has a BS from Wellesley College in German and Economics and an MBA from the University of Chicago. She speaks four languages and has lived in a like number of foreign countries. She joined ADM in 2002 and previously served as vice president-corporate finance of NIKE, Inc. Prior to joining NIKE, Loebl spent more than 13 years with General Motors Corporation in various finance and control positions around the world. She serves on the Wellesley College National Business Leadership Council.

Archer Daniels Midland Company is one of the largest agricultural processors in the world. The company takes crops and processes them to make food ingredients, animal feed ingredients, renewable fuels and naturally derived alternatives to industrial chemicals. Founded in 1902 and incorporated in 1923, ADM is headquartered in Decatur, Illinois, and operates processing and manufacturing facilities across the United States and worldwide. ADM has extensive global distribution facilities and capabilities.

--Ginny Hudak-David
January 2005