The share price of global agribusiness giant Archer Daniels Midland (ADM) fell 3.5% to US$69.85 following the announcement of its third-quarter profit, Reuters reported.
Weaker-than-expected operating profit at the company's Ag Services and Oilseeds division and Nutrition division more than offset a strong quarter at Carbohydrate Solutions, which led to a decline in earnings for the quarter, according to the Oct. 24 report. .
The company benefited from good demand for food, feed and biofuels, while record corn and soybean harvests in Brazil offset reduced supplies from drought-stricken Argentina and war-ravaged Ukraine, Reuters wrote.
ADM's new soybean processing plant in North Dakota, which is expected to reach full capacity in early November, is expected to benefit from strong demand for soybean meal in the US, while top exporter Argentina will likely run out of soybeans to crush next month, according to ADM CEO Juan Luciano.
“The global market is increasingly dynamic, with factors that create both opportunities and challenges,” said Luciano, citing “geopolitical tensions, inflationary pressures and the constant adjustment of commodity supply and demand balances.”
The company's long-term outlook remained positive due to increased demand for crops for biofuel production, according to the report.
“With the strong performance to date in 2023 and a constructive expectation for the remainder of the year, we are once again increasing our full-year earnings outlook,” said Luciano.
Expansion of renewable fuel production and ADM's financial performance highlighted
Renewable diesel production capacity is expected to double to 5 billion gallons/year (18.92 billion liters) by 2025. This will drive demand for soybean oil, as Luciano noted.
Production capacity for both fuels could increase to 14 billion to 15 billion gallons/year. Along with corn-based sustainable aviation fuel. This would occur until 2026/2027, according to its statement.
ADM announced adjusted earnings of US$1.63 per share for the third quarter ended September 30. This surpassed analysts' average estimate, which was US$1.52 per share. However, the result fell short of the US$ 1.86 per share recorded in the same quarter of the previous year. The data is from LSEG.
Ag Services and Oilseeds' operating profit fell by 21%, but the Carbohydrate Solutions division recorded a 49% increase in operating profit.
ADM's Nutrition segment faced challenges in the last quarter. Demand for meat alternatives has declined, affecting the bottom line. Additionally, a soybean processing facility was idled after an accident in September.
Source: Oils & Fats International
