Archer-Daniels-Midland Co reported an almost 52% rise in second-quarter profit on Tuesday,
as strong crop export demand and oilseed crushing margins boosted the U.S. grains merchant’s core agricultural services business.
Higher earnings extended ADM’s recovery from the impact of the COVID-19 pandemic, which hurt demand for ethanol and food products made by the company last year.
ADM and rivals Bunge Ltd, Cargill Inc and Louis Dreyfus Co - known as the ABCD quartet of grain trading giants - buy crops like corn and soybeans from farmers, export and process them.
ADM’s exports jumped in the quarter ended June 30, driven by corn sales to China, the company said. The world’s most populous country increased imports due to record domestic corn prices and strong feed demand from its hog sector.
Chinese farmers have sharply increased corn planting this year to cash in on soaring prices, though, a trend that is likely to cool the country’s appetite for imports heading into 2022, according to analysts.
ADM still expects “very strong full-year earnings,” Chief Executive Juan Luciano said in a statement.
The company said its soybean crushing business benefited from strong vegetable oil demand and higher margins in North America.
Tightening supplies and rising prices for soybeans have prompted U.S. processors to schedule needed maintenance downtime, analysts said. In June, the U.S. soybean crush fell to a two-year low, according to National Oilseed Processors Association.
“While U.S. soy crushing slowed in the quarter on limited availability of beans, crush margins held up on continued veg oil strength,” JP Morgan analysts said in a note.
Net quarterly earnings attributable to ADM rose to $712 million, or $1.26 per share, from $469 million, or 84 cents per share, a year earlier. Adjusted earnings of $1.33 per share beat analysts’ estimates for $1.03, according to Refinitiv IBES.
ADM’s revenue rose 40.8% to $22.92 billion, beating Wall Street’s estimate of $18.64 billion.
(Reporting by Arunima Kumar in Bengaluru and Tom Polansek in Chicago; Editing by Sriraj Kalluvila and Anil D’Silva)
