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Supply Chain

ADM Profit Tops Estimates On Big Brazilian Harvest, Strong Demand

By Reuters
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ADM Profit Tops Estimates On Big Brazilian Harvest, Strong Demand

Archer-Daniels-Midland beat Wall Street expectations for second-quarter profit, as the grain trader and processor benefited from a record Brazilian soybean harvest and robust global demand for grain and oilseeds.

Results, however, were below ADM's record second quarter a year ago due to headwinds from lower oilseed processing margins and reduced North American crop exports.

The earnings beat extended a streak of better-than-anticipated profits for the company, which makes money by processing, trading and shipping crops around the world, often thriving when crises such as droughts or wars trigger shortages.

ADM, which previously forecast full-year 2023 earnings at $6 to $7 per share, said it would raise its earnings outlook but did not provide details.

Food Supply Chain Disruptions

ADM and its agribusiness peers, including Bunge, Cargill and Louis Dreyfus, have capitalised on strong demand for food, feed and biofuel, while global food supply chain disruptions such as lower grain shipments from war-torn Ukraine have boosted prices.

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But rising raw commodity prices and tight crop supplies have squeezed margins for the global grains merchants.

ADM posted lower year-over-year results in its three largest business segments.

Reduced oilseed crushing margins and historically weak US corn and soybean exports weighed on results from ADM's Ag Services and Oilseeds segment, its largest by revenue and volume.

ADM's Carbohydrate Solutions unit capitalised on strong demand for sweeteners and starches, though results were dented by weaker ethanol margins.

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Results in the company's high-margin Nutrition segment struggled in what ADM called a 'challenging demand environment'.

ADM posted an adjusted profit of $1.89 per share for the three months ended  30 June, compared with analysts' average estimate of $1.60 per share, according to Refinitiv data.

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