(Corrects offer amount in first paragraph to A$2.68 billion ($2.8 billion), not $2.68 billion)
* Says ADM offer materially undervalues company
* ADM says has no immediate comment
* Adjusted profit up 19 pct to record A$205 million
* Graincorp seen holding for 15-20 pct rise in bid offer - sources
SYDNEY, Nov 15 (Reuters) - Australian grains handler GrainCorp knocked back an A$2.68 billion ($2.8 billion) takeover offer from Archer Daniel Midland Co on Thursday, saying the bid undervalued it as it reported a record annual net profit thanks to a bumper harvest.
Graincorp, which sources say is pressing for an offer up to 15 to 20 percent higher from ADM, used the 19 percent boost in profits to highlight its earnings power.
"Our business is ideally positioned to benefit from the growth in global demand for grain and processed grains, with global trade in our core grains expected to double by 2050," Chief Executive Officer Alison Watkins said in a statement.
The company advised ADM that its offer, made last month, "materially undervalues Graincorp."
"The GrainCorp board remains committed to maximising value for shareholders," it added in a separate statement.
ADM said it had no immediate comment.
GrainCorp shares opened up just 0.3 percent at A$12.22 on Thursday, a 4 percent premium to ADM's A$11.75 offer price.
Graincorp's adjusted net profit of A$205 million ($214 million), which excludes one-off items, was just shy of analyst expectations of A$206 million according to Thomson Reuters I/B/E/S data.
The company announced a fully franked final dividend of 35 cents per share, comprising 20 cents ordinary and 15 cents special. That brought the total full-year dividend to 65 cents per share, up from 55 cents a year ago.
Archer Daniel's bid for Graincorp comes at a time of dramatic consolidation in the global grains sector amid intense competition to feed fast-developing countries seeking food security.
Australia is a coveted market with a stable policy regime and good links to Asia. After a string of deals in the sector, GrainCorp is the last available independent asset of scale.
The grains handler is currently at the peak of its earnings cycle, buoyed by a strong harvest and record carry tonnage.
But analysts expect earnings to fall to A$177.8 million in 2012/13 and to A$142.7 million the next year as harvest sizes retreat from last season's record.
The company on Thursday sought to counter some of that anticipated fall, detailing an updated strategy that includes targeting incremental underlying EBITDA of around A$110 million by the end of 2016.
For the coming year, Watkins said GrainCorp Malt had forward sold 1 million tonnes of its 2013 production. Margins at GrainCorp oils are expected to be in line with historical performance amid firm domestic demand and growing international demand for canola oil, she said.
Two sources familiar with the process have told Reuters that GrainCorp is holding out for an offer 15 to 20 percent higher than ADM's October bid, and is assessing interest from rival global food and agriculture companies.
Other sources have said Russian investment and trading group Summa has sought funding for a possible bid. However, among a long list of other potential bidders -- including Cargill , Bunge, Louis Dreyfuss, Singapore's Wilmar International, China's Bright Food Group and COFCO -- there is little sign that any are ready to make a counter-offer.
A 15 to 20 percent sweetened offer for Graincorp would raise the bid closer to A$14 a share and put it right at the top end of past deals that were valued at 9 to 10 times earnings before interest, depreciation and amortization (EBITDA). The current offer values GrainCorp at about 8 times EBITDA. ($1 = 0.9584 Australian dollars) (Reporting by Jane Wardell, additional reporting by Tom Polansek in CHICAGO; Editing by John Mair)