ADM Earnings Swell on Strong Crop Demand, Processing Margins

(Bloomberg) -- Archer-Daniels-Midland Co., one of the world’s biggest crop traders, beat estimates for its third-quarter earnings, buoyed by high crop prices and strong global demand for grains and oilseeds.

The Chicago-based company has gotten a lift during the past year from a resurgence in its traditional business of buying, processing, storing and shipping crops around the world after wild weather helped to raise volatility in grain and oilseed markets. Meanwhile, ADM has also been advancing its strategy to move beyond trading grain and oilseeds, announcing investments in sustainable aviation fuel, pet food and a new flavor hub in Asia.

ADM pointed to strong margins for renewable diesel as well as animal nutrition profits that were nearly double the year-ago period amid strength in amino acids and feed additives as helping to boost returns.

“Our team’s great ability to leverage the favorable operating environment, and the consistent implementation of our strategic plan, have put ADM on track for a strong fourth quarter culminating in a second consecutive year of record earnings per share,” ADM Chief Executive Officer Juan Luciano said Tuesday in a statement.

Key Takeaways

• ADM said it had a “rapid return to operation after Hurricane Ida” but that results in agriculture services were lower year-on-year. Three of the company’s facilities along the Louisiana coast were affected by damage from the storm.
• In its ethanol-making and flour-milling Carbohydrate Solutions segment, results were “significantly lower primarily due to higher input costs,” while the resumption of two dry mill ethanol plants helped returns amid better fuel ethanol margins.
• The company said it was considering a conversion of over half of its corn ethanol capacity to instead make sustainable jet fuel in a fast-growing market as airlines seek to cut emissions.
• ADM last week said high grain prices have yet to impact demand while it was also able to pass on surging natural gas costs to customers in order to keep operations running.

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• ADM reported adjusted earnings per share of 97 cents, compared with the average analyst estimate for 88 cents and 89 cents a year ago.
• Shares gained as much as 0.9% before the start of regular trading in New York.
• Click here for a copy of the release.
• ADM will host a conference call with analysts at 9 a.m. New York time.

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