01—Abstract
Summary
Summary of the 10-K filed February 19, 2019. Cited figures are marked; the original filing is the authoritative source.
Archer-Daniels-Midland Company (ADM) demonstrated robust performance in its 2018 fiscal year, with revenues increasing by 6% to $64.3 billiona, 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 billionb. 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.
02—Key points
Key Highlights
- Revenue grew 6% to $64.3 billion in 2018, driven by increased sales volumes and prices in Origination and Oilseeds segments.
- Net earnings attributable to controlling interests increased 13% to $1.8 billion, reflecting improved segment profitability and operational efficiencies.
- The Nutrition segment experienced an 8% revenue increase, underscoring the company's strategic expansion in higher-value product areas.
- ADM completed several strategic acquisitions in 2018, including Probiotics International Limited and Rodelle Inc., to bolster its Health and Wellness and Nutrition portfolios.
- The company maintained strong liquidity, with $2.0 billion in cash, cash equivalents, and short-term marketable securities, and a current ratio of 1.7.
- ADM's global asset network and transportation capabilities continue to be a competitive advantage, connecting agricultural supply chains worldwide.
- The company is investing in research and development, with $141 million spent in 2018, focusing on innovation across its growth platforms, including sustainable materials.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 19, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $64.34B$60.83B | +5.8% |
| Cost of Revenue | $60.16B$57.31B | +5.0% |
| Gross Profit | $4.18B$3.52B | +18.8% |
| R&D Expenses | $141.00M$129.00M | +9.3% |
| SG&A Expenses | $2.17B$1.98B | +9.5% |
| Interest Expense | $364.00M$330.00M | +10.3% |
| Net Income | $1.81B$1.59B | +13.5% |
| EPS (Basic) | $3.21$2.80 | +14.6% |
| EPS (Diluted) | $3.19$2.79 | +14.3% |
| Shares Outstanding (Basic) | 564.00M569.00M | −0.9% |
| Shares Outstanding (Diluted) | 567.00M572.00M | −0.9% |
05—Questions
Frequently Asked Questions
What were the primary drivers of ADM's revenue growth in 2018?
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.
How did ADM's segment performance contribute to its overall financial results?
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.
What is ADM's strategy for future growth?
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.
How is ADM managing its financial resources and debt?
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.
06—Continue