10-QPeriod: Q2 FY2015

Archer-Daniels-Midland Co Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 4, 2015For Securities:ADM

Summary

Archer-Daniels-Midland Company (ADM) reported mixed financial results for the second quarter and first half of 2015, with a notable decrease in revenues driven by lower commodity prices and foreign currency translation impacts. Net earnings attributable to controlling interests saw a decline in the second quarter, falling to $386 million from $533 million in the prior year, though the first half of the year showed an increase to $879 million from $800 million. The company is actively managing its portfolio, including the announced sale of its global cocoa business and the acquisition of remaining interests in North Star Shipping and Minmetal. Significant swings in segment operating profit were observed, with Corn Processing impacted by lower ethanol margins and Agricultural Services facing margin pressure from South American competition and a strong U.S. dollar, while Oilseeds Processing demonstrated strong performance. Cash flow from operations decreased in the first half of 2015 compared to the prior year, impacting overall liquidity. The company managed its capital structure by issuing Euro-denominated debt and repurchasing shares. ADM also addressed market risks through various hedging activities, particularly in commodity and foreign exchange markets. Potential future impacts from ongoing tax assessments in Brazil and Argentina are being closely monitored.

Financial Highlights

50 data points
Beta

Revenue

$17.19B

5.6% Gross Margin

Net Income

$386.00M

2.2% Net Margin

EPS (Diluted)

$0.62

Total Assets

$40.57B

Cash & Equivalents

$867.00M

Free Cash Flow

$66.00M

Financial Statements
Beta
Revenue$17.19B
Cost of Revenue$16.22B
Gross Profit$964.00M
SG&A Expenses$525.00M
Interest Expense$85.00M
Net Income$386.00M
EPS (Basic)$0.62
EPS (Diluted)$0.62
Shares Outstanding (Basic)624.00M
Shares Outstanding (Diluted)627.00M

Key Highlights

  • 1Revenues for the quarter decreased by 20% to $17.2 billion, primarily due to lower commodity prices and foreign currency impacts.
  • 2Net earnings attributable to controlling interests for the second quarter declined to $386 million from $533 million in the prior year.
  • 3First half net earnings attributable to controlling interests increased to $879 million from $800 million in the prior year.
  • 4Segment operating profit decreased by $80 million in the second quarter, largely due to lower ethanol margins and weaker Agricultural Services results, partially offset by strong Oilseeds Processing performance.
  • 5The company is undertaking significant portfolio actions, including the announced sale of its global cocoa business and the acquisition of North Star Shipping and Minmetal.
  • 6Cash provided by operating activities for the first six months decreased to $407 million from $983 million in the prior year.
  • 7The company issued €1.1 billion in Euro-denominated debt and continued its share repurchase program, returning capital to shareholders.

Frequently Asked Questions

The revenue decline of 20% to $17.2 billion was primarily driven by lower sales prices for key agricultural commodities like soybeans, corn, and wheat, as well as a significant impact from foreign currency translation. Lower sales volumes also contributed to the decrease.

Performance varied across segments. Agricultural Services saw a decrease in operating profit due to margin pressure and reduced volumes. Corn Processing operating profit declined significantly, mainly due to lower ethanol margins resulting from strong industry production. Oilseeds Processing operating profit increased, driven by strong soybean crushing volumes and margins, and improved South American origination results. Wild Flavors and Specialty Ingredients showed an increase in operating profit, largely due to the acquisition of Wild Flavors and SCI.

Key risks include potential impacts from ongoing tax assessments in Brazil and Argentina, which could result in significant future payments and expenses. The company also faces market risks related to commodity price fluctuations, foreign currency exchange rates, and interest rates, which are managed through hedging activities. Additionally, reliance on credit markets for liquidity is a factor.

The company has announced the sale of its global cocoa business and closed on the sale of its global chocolate business. It also completed the acquisition of the remaining interest in North Star Shipping and Minmetal and is in the process of acquiring additional shares in Eaststarch C.V. These actions reflect ongoing portfolio management to optimize the business.