Archer Daniels Midland (ADM) intends to cut 1,000 jobs, or about 3% of its global workforce, as part of an effort to save about $100m a year, the company said on Wednesday.
The Decatur, Illinois-based grain processing giant said the layoffs primarily would be salaried positions, and it would offer a voluntary early retirement incentive in the United States to help achieve the reduction.
ADM’s chairman and CEO Patricia Woertz said in a statement: “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. These actions will help us enhance our productivity and earnings power.”
The company said it expects the job cuts to cost about $50m to $75m as a pre-tax charge in the third quarter of 2012. The full cost reduction benefit will be realized by the end of the third quarter of fiscal 2013, it said.
“These decisions do not reflect on the talent or dedication of our ADM team,” 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.”
ADM reported a $2.03bn profit in the last financial year to the end of June 2011, but its results are highly dependent on volatile grain commodity prices. Soaring grain prices weighed on the company’s corn processing business in the final quarter of fiscal 2011, driving up costs for starches and other food ingredients, and leading to a 15% decline in quarterly profits.
ADM is just the latest company in the sector to announce major job cuts, as commodity traders and processors face cost pressures. In December, privately-held Cargill said it would cut about 2,000 jobs, or about 1.5% of its global workforce, before it reported an 88% slump in quarterly profits earlier this week.