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Archer Daniels Midland Sold Its Brazilian Sugar Ethanol Operations

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Price movement

Archer Daniels Midland (ADM) has a market cap of $25.3 billion. It rose by 1.0% to close at $42.48 per share on May 25, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 13.3%, 7.8%, and 17.8%, respectively, on the same day. This means that ADM is trading 9.8% above its 20-day moving average, 12.9% above its 50-day moving average, and 11.2% above its 200-day moving average.

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Related ETFs and peers

The Vanguard Large-Cap ETF (VV) invests 0.15% of its holdings in ADM. The ETF tracks a market-cap-weighted index that covers 85% of the market capitalization of the US equity market. The YTD price movement of VV was 2.9% as of May 25, 2016.

The Consumer Staples Select Sector SPDR Fund (XLP) invests 1.4% of its holdings in ADM. The ETF tracks a market-cap-weighted index of consumer staples stocks drawn from the S&P 500.

The market caps of ADM’s competitors are as follows:

  • Bunge Limited (BG): $9.2 billion
  • Ingredion (INGR): $8.6 billion

ADM sold sugarcane operations

Archer Daniels Midland has completed the sale of its sugarcane ethanol operations in Limeira do Oeste, in Minas Gerais, a Brazilian state.

On May 24, 2016, the company praised the report by the US International Trade Commission (or ITC) on the benefits of the Trans-Pacific Partnership (TPP).

This agreement will provide the following benefits:

  • reduce trade barriers for small businesses
  • reduce import taxes on American-made products, including agricultural products
  • promote new technologies to help American businesses to sell products overseas

Performance in 1Q16

Archer Daniels Midland reported fiscal 1Q16 revenue of $14.4 billion, a fall of 17.8% compared to revenue of $17.5 billion in fiscal 1Q15. It reported asset impairment, exit, and restructuring costs of $13 million in fiscal 1Q16. Operating profit of Agricultural Services and Oilseeds Processing fell by 61.3% and 44.6%, respectively. The operating profit of the Corn Processing and Wild Flavors & Specialty Ingredients businesses rose by 15.9% and 2.9%, respectively, in fiscal 1Q16 compared to fiscal 1Q15.

Its net income and EPS (earnings per share) fell to $2.3 million and $0.39, respectively, in fiscal 1Q16, compared to $4.9 million and $0.77, respectively, in fiscal 1Q15.

Archer Daniels Midland’s cash and cash equivalents and operating working capital fell by 20.7% and 5.9%, respectively, in fiscal 1Q16 compared to fiscal 1Q15. Its debt-to-equity ratio rose to 0.54x in fiscal 1Q16 compared to 0.51x in fiscal 1Q15.

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