10-QPeriod: Q3 FY2009

Archer-Daniels-Midland Co Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 6, 2009For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported a significant decrease in net sales and net earnings for the third quarter ended September 30, 2009, compared to the same period in the prior year. Net sales declined by 29% to $14.9 billion, primarily driven by lower average selling prices across most segments, particularly in Agricultural Services and Oilseeds Processing. Net earnings attributable to controlling interests fell by over 50% to $496 million, or $0.77 per diluted share, down from $1.62 per share in the prior year. The company's performance was impacted by a challenging global economic environment and lower agricultural commodity market prices. While lower commodity costs and reduced energy expenses provided some relief, these were offset by decreased selling prices and, in the case of bioproducts, lower ethanol selling prices and increased startup costs for new facilities. Despite the earnings decline, ADM maintained a strong liquidity position with $2.8 billion in cash, cash equivalents, and short-term marketable securities, and a healthy current ratio of 2.2 to 1. The company also reaffirmed its commitment to financial flexibility with a debt-to-capital ratio of 35%.

Financial Highlights

46 data points
Beta

Revenue

$14.92B

6.5% Gross Margin

Net Income

$496.00M

3.3% Net Margin

EPS (Diluted)

$0.77

Total Assets

$31.86B

Cash & Equivalents

$2.39B

Free Cash Flow

$1.50B

Financial Statements
Beta
Revenue$14.92B
Cost of Revenue$13.95B
Gross Profit$973.00M
SG&A Expenses$354.00M
Interest Expense$98.00M
Net Income$496.00M
EPS (Basic)$0.77
EPS (Diluted)$0.77
Shares Outstanding (Basic)642.00M
Shares Outstanding (Diluted)644.00M

Key Highlights

  • 1Net sales decreased 29% year-over-year to $14.9 billion, largely due to lower average selling prices.
  • 2Net earnings attributable to controlling interests declined significantly to $496 million ($0.77 per diluted share) from $1.045 billion ($1.62 per diluted share) in the prior year's quarter.
  • 3Oilseeds Processing segment operating profit decreased 44% to $284 million, impacted by lower crushing margins and reduced sales volumes.
  • 4Agricultural Services operating profit saw a substantial drop of 59% to $175 million due to reduced demand and less volatile commodity markets.
  • 5Corn Processing operating profits increased 59% to $188 million, driven by improved sweetener and starch margins, although bioproducts faced challenges from lower ethanol prices.
  • 6The company maintained strong liquidity with $2.8 billion in cash, cash equivalents, and short-term marketable securities.
  • 7The debt-to-capital ratio remained conservative at 35%.

Frequently Asked Questions

The primary drivers for the decrease in net sales were lower average selling prices across most segments, particularly in Agricultural Services and Oilseeds Processing. Foreign currency translation impacts also contributed to the decline. Decreased sales volumes in merchandised grain, sweeteners, starches, and cocoa products were partially offset by increases in merchandised soybeans, ethanol, and wheat flour.

The Oilseeds Processing segment experienced a 44% decrease in operating profit, while Agricultural Services saw a 59% drop due to weaker demand and market conditions. Corn Processing, however, showed a significant increase in operating profit (59%), largely driven by improved performance in sweeteners and starches, despite challenges in the bioproducts sub-segment. The 'Other' segment saw a modest increase.

ADM maintained a strong liquidity position with $2.8 billion in cash, cash equivalents, and short-term marketable securities. The company had a current ratio of 2.2 to 1 and a healthy debt-to-capital ratio of 35%, indicating financial flexibility. Operating cash flow was $2.0 billion for the quarter, though lower than the prior year, primarily due to working capital changes related to lower commodity prices.

Yes, ADM adopted several new accounting standards effective July 1, 2009, including changes related to business combinations (ASC Topic 805), debt with conversion and other options (ASC Topic 470-20), consolidations (ASC Topic 810), and earnings per share (ASC Topic 260). The adoption of ASC Topic 470-20, in particular, required retrospective adjustments to prior periods' financial statements, affecting the classification of convertible debt and related equity components.