Archer Daniels Midland Co.

Overview Key strengths Key risks Global agribusiness leader with significant economies of scale. Vulnerable to earnings fluctuations due to operations in volatile business lines such as ethanol and grain origination. Good cost discipline with improved returns on capital. Subject to significant working capital swings that lead to higher debt balances, depending on grain inflation. Expanding product diversification into higher-margin offerings. Track record of managing leverage within targets consistent with our rating. S&P Global Ratings-adjusted EBITIDA declined 2% year over year for the nine months ended Sept. 30, 2023, with operating profit declining in all three business segments. The decline was not an entire surprise given the company?s record performance for the same period in 2022, particularly in the Ag Services

...Year-to-date performance has been modestly lower than our expectations, but we expect EBITDA will rebound by 3%-4% in 2024 as the underlying outlook for most of ADM's businesses remains favorable. S&P Global Ratings-adjusted EBITIDA declined 2% year over year for the nine months ended Sept. 30, 2023, with operating profit declining in all three business segments. The decline was not an entire surprise given the company's record performance for the same period in 2022, particularly in the Ag Services and Oilseeds segment for which origination and North America crush margins benefitted from global trade flow disruptions related to the Russia-Ukraine war and a small Brazilian soybean crop. We expect that business segment will continue to benefit from strong North American crush and specialty oils margins given growing demand for renewable fuels, many of the feedstocks for which ADM produces. As such, operating profit growth in that segment will likely rebound next year once it laps the tough...

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