Yahoo Finance Challenging Market Conditions Impacted ADM’s Revenue
Global Dynamics Challenged Archer Daniels Midland in 1Q16
What caused revenue to fall?
Archer Daniels Midland’s (ADM) revenue fell 18% YoY (year-over-year) to $14.38 billion in 1Q16. The revenue in the same quarter last year was $17.5 billion. Sales also missed estimates by 15%. The company earns its revenue through its five segments—Agricultural Services, Corn Processing, Oilseeds Processing, WILD Flavors and Specialty Ingredients, and Others. The Agricultural Services segment accounted for almost 45% of Archer Daniels Midland’s revenue in the first quarter.
What impacted the revenue?
Challenging market conditions and global dynamics impacted the company’s segmental performance. All of the segments reported a decline in revenue in 1Q16. The revenue fell 19% to $6.4 billion—compared to $8.04 billion in 1Q15 for the Agricultural Services segment. It was led by North American export volumes and margins, fewer global merchandising and transportation opportunities, and unfavorable Global Trade Desk merchandising positions.
The Oilseeds Processing segment’s revenue also fell 21% to $4.9 billion from $6.2 billion in 1Q15. This segment’s results were negatively impacted because of lower softseed crush volumes and weaker Brazilian commercialization that slowed throughout the first quarter. The Corn Processing segment’s revenue also fell 11%. The WILD Flavors segment showed a slight 2% fall in revenue YoY.
Peers’ revenue growth
Archer Daniels Midland’s industry competitors include Bunge (BG), Ingredion (INGR), and Flowers Foods (FLO). Bunge and Flowers Foods’ revenue fell by 17% and 2%. Ingredion’s revenue rose by 14% in its last reported quarter. The PowerShares Buyback Achievers Portfolio (PKW) and the SPDR S&P Dividend ETF (SDY) invest 1.1% and 0.85% of their portfolios in Archer Daniels Midland.
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