ADM profit tops estimates on good ethanol margins, Brazilian exports

By Karl Plume

CHICAGO (Reuters) – Global grains merchant Archer-Daniels-Midland Co beat Wall Street expectations for third-quarter profit on Tuesday on good ethanol and sweetener margins and strong Brazilian crop exports, though results were lower year-on-year.

Chicago-based ADM said it was raising its full-year earnings outlook after a strong first three quarters of the year and a favorable market environment.

ADM has capitalized on good demand for food, animal feed and biofuel, while record-large corn and soybean harvests in Brazil have offset reduced supplies from drought-hit Argentina and war-torn Ukraine. The company makes money by processing, trading and shipping crops around the world, often thriving when crises such as war or drought trigger shortages.

The company posted an adjusted profit of $1.63 per share for the three months ended Sept. 30, above analysts’ average estimate of $1.52 per share but short of the $1.86 per share posted in last year’s strong third quarter, according to LSEG data.

ADM’s Ag Services and Oilseeds unit, its largest in terms of revenue, posted a 21% drop in operating profit as a surge in South American crop exports dented demand for supplies from the United States, home to the bulk of the company’s operations. Lower year-on-year oilseed crushing results also dragged on profit.

Sharply lower results at Singapore-listed agribusiness Wilmar International pressured ADM’s oilseeds sub-segment. ADM owns a 22.5% equity stake in Wilmar, and is a joint venture partner with Wilmar in vegoils producer Olenex.

Robust ethanol, sweetener and starches margins propelled ADM’s Carbohydrate Solutions segment, which reported a 49% jump in operating profit.

ADM’s Nutrition segment posted lower results on weak demand for meat protein alternatives and unplanned downtime at a large soy processing facility following an accident in September.

Shares of ADM were up 0.8% in premarket trading.