(Updates with closing share price in last paragraph.)
Jan. 11 (Bloomberg) -- Archer Daniels Midland Co., the world’s largest grain processor, plans to cut about 1,000 positions, or 3 percent of its workforce, to reduce costs.
The company will offer voluntary retirement incentives and severance to achieve a significant portion of the job cuts, ADM said today in a statement. The cuts and other measures will trim annual pretax expenses by more than $100 million, ADM said.
“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,” Patricia Woertz, chief executive officer of Decatur, Illinois-based ADM, said in the statement. “These actions will help us enhance our productivity and earnings power.”
ADM is among agricultural companies, including Cargill Inc., trimming costs and cutting jobs amid higher and more volatile grain prices. The company’s fiscal first-quarter profit missed analysts’ estimates due to a “challenging market environment,” Woertz said Nov. 1.
ADM’s workforce reductions are an attempt to reduce costs and respond to weakness in units such as soybean processing, Ann Gurkin, a Richmond, Virginia-based analyst for Davenport & Co., who has a “buy” rating on the shares, said in an interview today. The changes also may be the result of recent management changes, she said.
During the first phase of the cuts, ADM will offer U.S. employees 57 and older who have 7 years or more of service a voluntarily early-retirement incentive, company spokesman David Weintraub said in a telephone interview today. Employees who meet that criteria have until Jan. 31 to make a decision, he said.
“It helps us reduce involuntary reductions,” Weintraub said.
The second phase will include reductions globally depending on the number of employees who choose the early retirement option, he said. ADM wants to reduce corporate staff by 15 percent and salaried business staff by 5 percent, he said.
Closely held Cargill yesterday reported an 88 percent drop in profit for the fiscal second quarter from a year earlier. Cargill said in December it planned to cut as much as 2,000 jobs, or 1.5 percent, of its global workforce. Bunge Ltd. said in October it was hindered in the third quarter of 2011 by a “very rare” combination of factors including the European debt crisis and surprise crop reports.
ADM rose less than 1 percent to $28.93 in New York. The shares have fallen 10 percent in the last year.
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