Archer-Daniels-Midland (ADM) forges every link in the food chain from field to processing to store. One of the world's largest processors of agricultural commodities, the company converts corn, oilseeds, and wheat into products for food, animal feed, industrial, and energy uses at 280 processing plants worldwide. The company is also a leading manufacturer of protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients. ADM operates an extensive US grain elevator and global transportation network that buys, stores, transports, and resells feed commodities for the agricultural processing industry, connecting crops with markets on six continents.
ADM's businesses are Agricultural Services, Corn Processing, Oilseeds Processing, and Wild Flavors and Specialty Ingredients.Agricultural services accounted for about 44% of 2015 sales; Oilseeds (soybeans, cottonseed, canola, and flaxseed) processing (about 39%); and corn processing (about 13%) --
The Wild Flavors and Specialty Ingredients segment (3%) engages in the manufacturing, sales, and distribution of specialty products including natural flavor ingredients, natural colors, proteins, emulsifiers, natural health and nutrition products, and other specialty food and feed ingredients.
The company's results can be best understood in the light of changing agricultural commodity prices. Commodity prices impact sales and the cost of products sold. And, in ADM's corn and other food and feed processing operations, commodity prices raise (or lower) the cost of raw materials. Energy prices, weather events, crop health, as well as government programs and shifts in population, can also influence ADM's performance.
A big part of ADM's business is getting products from one place to another. It has developed a comprehensive transportation network that moves commodities and processed products around the world. It owns or leases trucks, trailers, railroad tank and hopper cars, river barges, towboats, and ocean-going vessels.
The US is ADM's largest market, accounting for about 47% of the company's total sales in 2015. Switzerland accounted for 17%, and Germany, 5%, with more than 160 other countries contributing the rest. ADM currently owns or leases 280 processing plants and more than 425 procurement facilities, 30% of which are located outside of the US.
The company also has 290 warehouses and terminals primarily used as bulk storage facilities and 39 innovation centers.
ADM has Agricultural Services processing plants in North America and Europe; Agricultural Services procurement facilities in North America, South America, and Europe; Corn Processing plants in North America, South America, Europe, and Asia. Oilseeds processing plants in North America, South America, Europe, Asia, and Africa; Oilseeds Processing procurement facilities in North America, South America, and Europe; and Wild Flavors and Specialty Ingredients operations in North America, South America, Europe, and Asia.
Sales and Marketing
The company's products are distributed mainly in bulk from processing plants or storage facilities directly to customers' facilities. ADM has developed transportation capability to move both commodities and processed products virtually anywhere in the world. It owns or leases large numbers of the trucks, trailers, railroad tank and hopper cars, river barges, towboats, and ocean-going vessels.
In 2015 net sales decreased by $13.4 billion due to lower sales prices and lower sales volume. Sales prices decreased principally due to lower underlying agricultural commodity prices, in particular prices of soybeans, corn, and wheat, and foreign currency translation impacts due to the strength of the U. dollar.
Net income decreased by $399 million compared to 2014 as the result of lower sales partially offset by decreased income taxes.
In 2015 ADM's net cash provided by the operating activities decreased by $2.4 billion.
ADM's acquisitions of two companies that supply natural ingredients and foods give it a foothold in a fast growing facet of the food business as consumers seek more natural, healthier fare and shying away from processed products. The company created a division based on those acquisitions to supply natural flavor ingredients, flavor systems, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, sorbitol, xanthan gum, natural health and nutrition products, and other specialty food and feed ingredients.
The company continued its international expansion with activities in Central America and China. ADM opened distribution and merchandising offices in El Salvador and Guatemala in 2015. In China, the company is building a feed-premix plant in Zhangzhou, bringing the number of Chinese feed plants to four. Back in the US, ADM opened a feed plant in Minnesota for the growing Midwest market.
The company's strategy involves expanding the volume and diversity of crops that it merchandises and processes, expanding the global reach of its core model, and expanding its value-added product portfolio. One of ADM's strategies is to expand the global reach of its core model may include expanding or developing its business in emerging market areas such as Asia, Eastern Europe, the Middle East, and Africa. As the company adds new products to its portfolio, it is keeps an eye on operations that fail to meet expectations. To that end, in 2016 ADM sold its sugarcane ethanol operations in Limeira do Oeste, in the Brazilian state of Minas Gerais. In 2015 ADM sold its chocolate business to
for about $440 million and its cocoa business, including equipment and facilities, to Singaporean ingredients company Olam International for about $1.2 billion.
Mergers and Acquisitions
During 2016 ADM acquired 90% of Harvest Innovations (an industry leader in minimally processed, expeller-pressed soy proteins, oils, and gluten-free ingredients) for $84 million. It also agreed to acquire from Tate & Lyle a Casablanca, Morocco-based corn wet mill that produces glucose and native starch.
That year the company acquired full ownership of Amazon Flavors, a leading Brazilian manufacturer of natural extracts, emulsions and compounds. Brazil is a key market for the growth of ADM's ingredient sales around the globe.
ADM made two deals in 2015 that boost its transportation capacity South American and Europe. Agri Port Services, ADM's joint steamship agency with North Lilly International, acquired Blue Ocean Agencia Martima Ltd., which services vessels at ports in Brazil. In Europe AMD acquired complete ownership of North Star Shipping and Minmetal. The acquisition adds export facilities on the Black Sea from the port of Constanta, Romania.
In 2015 ADM also bought of Eatem Foods (a leading developer and producer of premium traditional, natural, and organic savory flavor systems) for $160 million; and the remaining interest in Eaststarch C.V. for €240 million. The latter acquisition included corn wet mills in Bulgaria and Turkey and a 50% stake in a wet mill in Hungary.