10-KPeriod: FY2017

Archer-Daniels-Midland Co Annual Report, Year Ended Dec 31, 2017

Filed February 16, 2018For Securities:ADM

Summary

Archer-Daniels-Midland Company (ADM) reported revenues of $60.8 billion for the fiscal year ended December 31, 2017, a slight decrease from $62.3 billion in 2016. This decline was primarily driven by lower sales volumes across its segments, particularly in Agricultural Services and Corn Processing, impacted by factors like reduced unprocessed commodity volumes and lower ethanol margins. Net earnings attributable to controlling interests increased to $1.6 billion from $1.3 billion in the prior year, bolstered by a significant tax benefit from the Tax Cuts and Jobs Act, which reduced the effective tax rate to 0.4% from 29.3%. Despite revenue pressures, ADM demonstrated operational resilience, with segment operating profit showing strength in Corn Processing and Wild Flavors and Specialty Ingredients, though Oilseeds Processing faced margin compression. The company continued its strategic growth initiatives, including acquisitions in the pet treat and microbial technology sectors, and portfolio optimization, such as the sale of its crop risk services business. ADM maintained a solid balance sheet with a strong liquidity position and a manageable debt-to-capital ratio, supporting its ongoing capital expenditures and dividend payments.

Financial Highlights

54 data points
Beta

Revenue

$60.83B

5.8% Gross Margin

Net Income

$1.59B

2.6% Net Margin

EPS (Diluted)

$2.79

Total Assets

$39.96B

Cash & Equivalents

$804.00M

Free Cash Flow

-$7.01B

Financial Statements
Beta
Revenue$60.83B
Cost of Revenue$57.31B
Gross Profit$3.52B
R&D Expenses$129.00M
SG&A Expenses$1.98B
Interest Expense$330.00M
Net Income$1.59B
EPS (Basic)$2.80
EPS (Diluted)$2.79
Shares Outstanding (Basic)569.00M
Shares Outstanding (Diluted)572.00M

Key Highlights

  • 1Total revenues for the fiscal year ended December 31, 2017, were $60.8 billion, a decrease from $62.3 billion in 2016, mainly due to lower sales volumes across segments.
  • 2Net earnings attributable to controlling interests rose to $1.6 billion in 2017 from $1.3 billion in 2016, significantly benefiting from a substantial tax reduction due to the Tax Cuts and Jobs Act.
  • 3The company's effective tax rate decreased dramatically to 0.4% in 2017 from 29.3% in 2016, largely attributed to the new U.S. tax legislation.
  • 4Segment operating profit decreased by $168 million to $2.5 billion, with Corn Processing showing strong growth, while Oilseeds Processing experienced a decline due to lower crush margins.
  • 5ADM made strategic acquisitions in 2017, including Crosswind Industries and Biopolis SL, to expand its specialty ingredients and nutrition portfolio.
  • 6The company maintained a stable liquidity position, with $0.8 billion in cash and cash equivalents and $5.5 billion in unused lines of credit at the end of 2017.
  • 7Long-term debt to total capital ratio remained stable at 27% at year-end 2017, indicating a consistent capital structure.

Frequently Asked Questions

ADM's revenues decreased slightly in 2017 to $60.8 billion from $62.3 billion in 2016. This was primarily due to lower sales volumes, particularly in Agricultural Services and Corn Processing, influenced by factors like reduced unprocessed commodity volumes and challenging ethanol market conditions.

The Tax Cuts and Jobs Act enacted in late 2017 significantly benefited ADM by reducing its effective tax rate from 29.3% in 2016 to 0.4% in 2017. This was largely due to a reduction in the U.S. federal corporate tax rate and the recognition of a provisional tax benefit related to the Act.

In 2017, ADM continued its strategic growth and portfolio optimization. Key actions included acquisitions such as Crosswind Industries (pet treats) and Biopolis SL (microbial technology) to bolster its specialty ingredients and nutrition offerings. The company also divested its crop risk services business and made significant investments in facility upgrades and expansions across various segments.

ADM operates in four main segments: Agricultural Services, Corn Processing, Oilseeds Processing, and Wild Flavors and Specialty Ingredients (WFSI). In 2017, Corn Processing saw improved operating profit due to strong demand for sweeteners and starches. WFSI also experienced a slight increase in operating profit. However, Agricultural Services had mixed results, with improved Merchandising and Handling offset by lower Milling and Other and Transportation results. Oilseeds Processing saw a decrease in operating profit due to lower soybean crush margins and weaker origination margins.