10-KPeriod: FY2018

Archer-Daniels-Midland Co Annual Report, Year Ended Dec 31, 2018

Filed February 19, 2019For Securities:ADM

Summary

Archer-Daniels-Midland Company (ADM) demonstrated robust performance in its 2018 fiscal year, with revenues increasing by 6% to $64.3 billion, driven by higher sales prices and volumes across key segments, particularly in Oilseeds and Origination. Net earnings attributable to controlling interests saw a significant rise of 13% to $1.8 billion. The company's strategic focus on its five growth platforms – Taste, Nutrition, Animal Nutrition, Health and Wellness, and Carbohydrates – is evident in its segment performance, with Nutrition showing an 8% revenue increase. ADM continues to expand its global reach and product portfolio through strategic acquisitions, notably in the Nutrition and Animal Nutrition sectors. The company also reported strong operational cash flow and maintained solid financial flexibility, with ample liquidity and a manageable debt-to-capital ratio.

Financial Highlights

54 data points
Beta

Revenue

$64.34B

6.5% Gross Margin

Net Income

$1.81B

2.8% Net Margin

EPS (Diluted)

$3.19

Total Assets

$40.83B

Cash & Equivalents

$2.00B

Free Cash Flow

-$5.63B

Financial Statements
Beta
Revenue$64.34B
Cost of Revenue$60.16B
Gross Profit$4.18B
R&D Expenses$141.00M
SG&A Expenses$2.17B
Interest Expense$364.00M
Net Income$1.81B
EPS (Basic)$3.21
EPS (Diluted)$3.19
Shares Outstanding (Basic)564.00M
Shares Outstanding (Diluted)567.00M

Key Highlights

  • 1Revenue grew 6% to $64.3 billion in 2018, driven by increased sales volumes and prices in Origination and Oilseeds segments.
  • 2Net earnings attributable to controlling interests increased 13% to $1.8 billion, reflecting improved segment profitability and operational efficiencies.
  • 3The Nutrition segment experienced an 8% revenue increase, underscoring the company's strategic expansion in higher-value product areas.
  • 4ADM completed several strategic acquisitions in 2018, including Probiotics International Limited and Rodelle Inc., to bolster its Health and Wellness and Nutrition portfolios.
  • 5The company maintained strong liquidity, with $2.0 billion in cash, cash equivalents, and short-term marketable securities, and a current ratio of 1.7.
  • 6ADM's global asset network and transportation capabilities continue to be a competitive advantage, connecting agricultural supply chains worldwide.
  • 7The company is investing in research and development, with $141 million spent in 2018, focusing on innovation across its growth platforms, including sustainable materials.

Frequently Asked Questions

ADM's revenue growth in 2018 was primarily driven by higher sales prices and volumes, particularly in the Origination and Oilseeds segments. Increases in corn and soybean meal prices and volumes contributed significantly to the overall revenue increase.

All segments contributed positively to operational profit. Origination saw a 35% increase in operating profit, driven by strong merchandising and handling results. Oilseeds showed a substantial 79% increase, fueled by a strong global demand and margin environment in crushing and origination, as well as benefits from a biodiesel tax credit. Carbohydrate Solutions experienced a slight decrease in operating profit, while the Nutrition segment grew by 9%, reflecting the company's successful expansion in value-added products.

ADM's growth strategy is centered around five key platforms: Taste, Nutrition, Animal Nutrition, Health and Wellness, and Carbohydrates. This strategy is executed through optimizing core businesses, driving efficiencies, and expanding strategically, which includes pursuing acquisitions to enhance its capabilities in higher-growth, value-added product areas.

ADM maintains a strong liquidity position with substantial cash and available credit lines. The company's debt-to-capital ratio remained manageable, and it actively manages its capital structure through debt issuances and repurchases. ADM expects to fund its 2019 capital expenditures and dividend payments through a combination of operating cash flow and existing liquidity.