ADM's profit doubles on high global grain demand
By Karl Plume
Global grains merchant Archer-Daniels-Midland Co on Tuesday posted its strongest third-quarter profit on record on robust demand for grain and oilseeds and tight supplies, and said full-year earnings would exceed previous guidance.
Along with strong demand, stout soy processing margins would more than offset pressure from lower ethanol margins and reduced U.S. crop exports through the end of the year.
ADM shares touched a six-week high as earnings topped the consensus analyst estimate for a 13th straight quarter.
ADM's results offered a look into how global agribusinesses have weathered tightening grain stocks, high energy prices and snarled supply chains following Russia's February invasion of Ukraine.
Supply chain middlemen like ADM make money processing, trading, and shipping crops around the world. They tend to thrive when crises such as droughts or war trigger shortages in parts of the world.
"From what we can see here in a very uncertain world is we have very good momentum going into 2023," said Chief Executive Juan Luciano.
"We anticipate ongoing resilient demand for our products, a strong crush margin environment, a positive outlook for starches and sweeteners."
Luciano said full-year earnings would exceed $7 a share, topping ADM's previous outlook for $6.50, despite thinner ethanol margins and U.S. export disruptions due to low water on the Mississippi River, a crucial grain shipping artery.
The shipping woes will cut U.S. soybean export volumes and shift more corn exports to early 2023, he added.
ADM said the adjusted operating profit in its Ag Services and Oilseeds segment, its largest, jumped 74% in the quarter ended Sept. 30, while Carbohydrate Solutions segment profit rose 45%.
Net earnings attributable to ADM were $1.03 billion, or $1.83 per share, compared with $526 million, or $0.93 per share, a year earlier.
The results topped the consensus analyst estimate of $1.39 a share.
(Additional reporting by Arshreet Singh in Bengaluru; editing by Milla Nissi and Chizu Nomiyama)
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