Global agribusiness giant Archer Daniels Midland (ADM)’s share price dropped by 3.5% to US$69.85 following the announcement of its third quarter profit, Reuters reported.
Weaker than expected operating profit in the company’s Ag Services and Oilseeds division and Nutrition more than offset a strong quarter in Carbohydrate Solutions, which led to a decline in earnings for the quarter, the 24 October report said.
The company had benefited from good demand for food, feed and biofuel, while record Brazilian corn and soyabean harvests had offset reduced supplies from drought-hit Argentina and war-torn Ukraine, Reuters wrote.
ADM’s new North Dakota soyabean processing plant, which was expected to reach full capacity by early November, was set to benefit from strong US soyabean meal demand, while top exporter Argentina was likely to run out of soyabeans to crush next month, ADM CEO Juan Luciano was quoted as saying.
“The global market is increasingly dynamic, with factors that create both opportunities and challenges,” Luciano said, citing “geopolitical tensions, inflationary pressures and the constantly adjusting balances of commodity supply and demand”.
The company’s longer-term outlook remained positive due to surging demand for crops to make biofuels, the report said.
“With strong performance to date in 2023 and a constructive expectation for the remainder of the year, we are again raising our full-year earnings outlook,” Luciano said.
Renewable diesel production capacity was expected to double to 5bn gallons/year (18.92bn litres) by 2025 in a boost for soyabean oil demand, Luciano added. Along with corn-based sustainable aviation fuel, production capacity for both fuels could surge to 14bn-15bn gallons/year (52.9bn/56.7bn litres) by 2026/2027, he said.
ADM posted an adjusted profit of US$1.63/share for the three months ended 30 September, above analysts' average estimate of US$1.52/share but below the US$1.86/share in the same quarter of last year, according to LSEG data.
Ag Services and Oilseeds operating profit dropped by 21% but the Carbohydrate Solutions division reported a 49% increase in operating profit.
ADM’s Nutrition segment posted lower results due to reduced demand for meat alternatives and downtime at a large soyabean processing facility following an accident in September.
