ADM’s Q2 performance delivers double-digit profit margins in oilseeds, carbohydrate solutions & nutrition

28 Jul 2021 --- In ADM’s financial results for the second quarter, the agri-food giant’s Ag Services & Oilseeds segment delivered operating profits almost 40 percent higher than the previous year’s quarter. The company’s Carbohydrate Solutions results were almost double those of the prior-year period, while Nutrition delivered record performance, with 15 percent revenue growth and 27 percent higher year-over-year profits.

“It was yet another excellent quarter for ADM, as our team delivered record earnings, with strong year-over-year profit growth across all three business units,” says Chairman and CEO Juan Luciano.

“This is a very different ADM than even a few short years ago, and our transformation is far from over,” he continues. “Our productivity efforts are powering our execution, and – combined with our unparalleled global footprint and strong risk management – supported outstanding results in both Ag Services & Oilseeds and Carbohydrate Solutions.”

“We’re driving innovation, which helped support record top-line and bottom-line results in Nutrition; in fact, we are now raising our expectations of full-year profit growth for Nutrition to 20 percent.”

Quarterly results of operations
ADM’s Ag Services results increased year-over-year. The North American origination business effectively managed its positions in a dynamic pricing environment, and also delivered significantly higher export volumes, driven by corn sales to China.

South American origination was impacted by slower farmer selling and high commodity prices.South American origination was impacted by slower farmer selling and high commodity prices, which impacted contract fulfillment. Meanwhile, global trade performance was lower than the strong second quarter of 2020, with results driven partially by timing impacts that the company expects should reverse.

Crushing had substantially higher year-over-year results. The business executed well in an environment of strong vegetable oil demand to deliver higher execution margins in North American soy and EU softseeds.

Results were partially offset by weaker soybean crush margins in South America. In addition, there were approximately US$70 million in net incremental negative timing effects, which the company expects will reverse in the coming quarters.

Refined Products and Other results were significantly higher than the prior-year period, driven by continued recovery in foodservice as well as positive timing effects in North America, partially offset by impacts of the reduction in Brazilian biodiesel mandates.

Equity earnings from Wilmar – an Asian agri-businesses and packaged food oils company in which ADM holds a significant stake – were higher year-over-year.

Among its most recent acquisitions for this segment, ADM has agreed to buy Sojaprotein – a European provider of soy ingredients – to expand its plant protein production capacity and customer base.

Carbohydrate Solutions
Starches and Sweeteners, including ethanol production from our wet mills, delivered substantially higher year-over-year results, driven by about US$90 million in positioning gains across the ethanol complex in a highly dynamic environment, as well as more normalized results from corn oil.

Sweetener volumes were higher, reflecting the beginnings of a recovery in demand from the foodservice channel. Ethanol margins improved versus the prior-year period, driven by a resurgence in driving miles in the US.

Vantage Corn Processors results were much higher than the second quarter of 2020, supported by the resumption of production at our two dry mills, improved fuel ethanol margins and favorable performance in USP-grade industrial alcohol from our Peoria complex.

Nutrition revenues
Human Nutrition revenues were 13 percent higher than Q2 of last year on a constant currency basis, and operating profits were up by 24 percent.

Sweetener volumes were higher, reflecting the beginnings of a recovery in demand from the foodservice channel.In North America and EMEA, the flavors business delivered strong volumes and improved product mix, particularly in the beverage segment.

Specialty Ingredients delivered strong sales growth in specialty proteins, though results were lower due to certain one-time costs, mainly in texturants.

In Health & Wellness, stronger sales and margins in probiotics were offset by higher costs in fibers due to planned facility downtime.

Other items of note
ADM’s Other Business segment results were substantially lower than the prior-year period, driven primarily by captive insurance underwriting losses, most of which were offset by corresponding recoveries in other business segments.

“We’re excited about our growth trajectory as we continue to expand our participation in large and fast-growing categories, from alternative proteins to renewable green diesel to plant-based biosolutions, with all of our strategic efforts underpinned by our unique opportunity to use ADM’s integrated value chain to advance decarbonization of the food and agriculture industries,” Luciano remarks.

“Given our great start to the year and our expectation of continued momentum in the second half, we are confident in delivering very strong full-year earnings, and we remain well-positioned for robust, sustained growth in the years to come.”

By Benjamin Ferrer

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