10-QPeriod: Q3 FY2016

Archer-Daniels-Midland Co Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 1, 2016For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported net earnings attributable to controlling interests of $341 million for the third quarter of 2016, an increase from $252 million in the same period of 2015. This improvement was driven by a combination of factors, including higher volumes in Agricultural Services and improved results in Corn Processing, particularly in sweeteners and starches. Despite an overall decrease in revenues to $15.8 billion from $16.6 billion in the prior year's quarter, primarily due to lower commodity prices, the company demonstrated strong operational execution. Gross profit remained stable year-over-year. Segment operating profit saw a decrease due to lower soy crush margins in Oilseeds Processing and a loss from an equity investment in Wilmar, but this was partially offset by gains in Agricultural Services and Corn Processing. The company also reported a significant reduction in corporate charges, contributing to the net earnings improvement.

Financial Highlights

50 data points
Beta

Revenue

$15.83B

6.9% Gross Margin

Net Income

$341.00M

2.2% Net Margin

EPS (Diluted)

$0.58

Total Assets

$39.85B

Cash & Equivalents

$701.00M

Free Cash Flow

$1.44B

Financial Statements
Beta
Revenue$15.83B
Cost of Revenue$14.74B
Gross Profit$1.09B
SG&A Expenses$546.00M
Interest Expense$78.00M
Net Income$341.00M
EPS (Basic)$0.58
EPS (Diluted)$0.58
Shares Outstanding (Basic)586.00M
Shares Outstanding (Diluted)589.00M

Key Highlights

  • 1Net earnings attributable to controlling interests increased to $341 million in Q3 2016 from $252 million in Q3 2015.
  • 2Total revenues decreased to $15.8 billion from $16.6 billion, largely due to lower commodity prices.
  • 3Gross profit remained stable at $1.1 billion, with improved merchandising results in Agricultural Services and better sweetener demand offsetting lower soy crush margins.
  • 4Agricultural Services operating profit increased by $44 million, driven by higher volumes and improved margins due to a shift in global demand towards North America.
  • 5Corn Processing operating profit increased significantly by $81 million, benefiting from strong demand for sweeteners and starches, and improved operational performance.
  • 6Oilseeds Processing operating profit decreased by $191 million, primarily due to lower soy crush margins and reduced origination volumes in Brazil.
  • 7Corporate charges were significantly reduced to $165 million from $342 million, positively impacting net earnings.

Frequently Asked Questions

The primary driver for the increase in net earnings was a combination of improved operational performance in key segments like Agricultural Services and Corn Processing, alongside a significant reduction in corporate charges compared to the prior year. While overall revenues decreased due to lower commodity prices, effective cost management and volume increases in certain areas contributed to the higher profitability.

The Oilseeds Processing segment experienced a decline in operating profit, down $191 million. This was primarily attributed to lower soy crush margins, which were historically strong in the prior year, and reduced origination volumes in Brazil due to adverse weather conditions. While refining, packaging, biodiesel, and other operations showed some strength, the overall segment was negatively impacted.

The filing indicates positive momentum in Agricultural Services, driven by export competitiveness and demand shifts. Corn Processing continues to show strength in sweeteners and starches. However, Oilseeds Processing faces margin pressures. The company is also focusing on strategic portfolio actions and capital efficiency to drive long-term returns.

ADM's results are significantly influenced by agricultural commodity prices, weather conditions, global demand, government policies, and currency exchange rates. The report highlights how shifts in global grain export competitiveness and changes in demand for products like ethanol and vegetable oils directly impact segment performance.