Global firm Archer Daniels Midland's (ADM) earnings for the first quarter of 2020 fell on the year but beat market analysts' estimates as the group's CEO said the company experienced a limited impact to business performance from the Covid-19 pandemic. 19.
The group's first quarter financial performance was helped by strong sales from farmers in Brazil that boosted its origination business and a solid performance from its agricultural services and nutritional businesses.
“We are operating around the world with minimal disruptions,” said president and CEO Juan Luciano, but added that there are “many unknowns and ADM is not immune to some of the negative effects of this pandemic.”
The “A” in the so-called ABCD of major agricultural companies, ADM's first-quarter results offer a first glimpse of the pandemic's effects on the sector, after lockdowns around the world disrupted supply chains, stunted biofuel demand and forced processors to close.
Earnings in its Ag Services and Oilseeds segment increased by 1.2% for the year to US$$422 million, mainly due to the near doubling in Ag Service results, which jumped to US$164 million with a stronger origin in Brazil and without repeat of the floods that hit North America. beginning of last year.
ADM's results for its crushing operations, however, fell 66% to US$$70 million, despite strong volumes and solid margins.
This meant the unit was struggling to repeat last year's exceptional results following soybean shortages in Argentina.
Results from the company's refined and other products – which includes biodiesel trading – were slightly better for the year, with the first quarter ending just two weeks after lockdowns hit Europe and North America and reduced demand for diesel.
This also means that ADM's ethanol sector saw limited impact during the first quarter when the virus was spreading across the US, as the drop in domestic ethanol demand only occurred in late March.
ADM subsidiary Vantage Corn Processors, which operates several dry ethanol plants reported a loss of US$$31 million for the quarter, an improvement over the US$$39 million loss accumulated last year.
“Effective risk management, combined with the lack of severe weather impacts seen in the first quarter of 2019, helped offset the industry's weak ethanol margins caused by significantly reduced demand,” ADM said.
Falling demand for ethanol forced the group to idle two of its facilities earlier this month as low demand hit the sector.
The group's earnings per share for the first quarter came in at US$1TP4Q0.69, up from last year's US$1TP4Q0.41, beating Wall Street's average estimate of US$1TP4Q0.56, while the group's total revenue for the quarter fell 2.2%, for about US $ 15 billion.
Source: AgriCensus
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