Summary
Archer-Daniels-Midland Company (ADM) reported a decrease in net earnings attributable to controlling interests for the three months ended September 30, 2010, compared to the same period in 2009. This decline was primarily driven by significant LIFO inventory charges due to rising agricultural commodity prices, contrasting with a LIFO credit in the prior year. Despite a slight decrease in overall segment operating profit, notable performance improvements were seen in the Corn Processing segment, largely due to increased ethanol margins and volumes, and the Oilseeds Processing segment, benefiting from strong biodiesel demand and improved origination. The company's balance sheet shows an increase in total assets, largely due to higher inventory levels reflecting the rise in commodity prices. While current liabilities also increased, primarily driven by higher accounts payable and accrued expenses linked to increased business activity and commodity prices, ADM maintained a current ratio of 1.8 to 1. Cash flow from operations turned negative for the quarter, a shift from the prior year, primarily due to increased working capital needs associated with higher commodity prices. However, the company ended the quarter with substantial liquidity, including significant cash, cash equivalents, and marketable securities, and ample unused lines of credit, indicating financial flexibility to manage its capital-intensive operations.
Financial Highlights
48 data points| Revenue | $16.80B |
| Cost of Revenue | $15.99B |
| Gross Profit | $808.00M |
| SG&A Expenses | $381.00M |
| Interest Expense | $117.00M |
| Net Income | $345.00M |
| EPS (Basic) | $0.54 |
| EPS (Diluted) | $0.54 |
| Shares Outstanding (Basic) | 640.00M |
| Shares Outstanding (Diluted) | 641.00M |
Key Highlights
- 1Net earnings attributable to controlling interests decreased by $151 million to $345 million for the three months ended September 30, 2010, compared to $496 million in the prior year, primarily due to increased LIFO inventory charges.
- 2Segment operating profit saw a slight decrease of $9 million to $765 million, with significant gains in Corn Processing ($153 million increase) offset by declines in Agricultural Services ($43 million decrease) and Other ($143 million decrease).
- 3Net sales and other operating income increased by 13% to $16.8 billion, driven by higher sales volumes across most segments, particularly Agricultural Services and Corn Processing (ethanol).
- 4Cash flow from operating activities was negative at $(871) million for the quarter, a significant decrease from $1.99 billion in the prior year, mainly due to increased working capital requirements tied to rising agricultural commodity prices.
- 5Total assets increased by $4.5 billion to $36.0 billion, with a substantial portion attributed to higher inventory levels ($1.4 billion increase) reflecting increased commodity prices.
- 6Short-term debt significantly increased from $374 million to $1.72 billion, contributing to a rise in total current liabilities and a decrease in the current ratio to 1.8:1 from 2.1:1 at June 30, 2010.
- 7The company's effective income tax rate decreased to 26.0% from 30.7% in the prior year, mainly due to changes in the geographic mix of pre-tax earnings.