USA- The second quarter financial results for ADM, a premier global human and animal nutrition company, exceeded Wall Street expectations, even though they declined due to lower oilseed processing margins and reduced North American crop exports.
According to reports, net earnings attributable to ADM in the second quarter ended June 30 totaled US$927 million, equal to US$1.70 per share on the common stock, down 38% from US$1.24 billion, or US$2.18 per share, in the same period a year ago.
Despite this drop, the results beat Wall Street expectations for second-quarter profit. They raised their 2023 earnings outlook as the company benefited from a record Brazilian harvest and robust global demand.
ADM provides that these results fell due to headwinds from lower oilseed processing margins and reduced North American crop exports.
Ag Services & Oilseeds leveraged recent investments in infrastructure and operations to achieve record origination volumes in Brazil, noted Chairman and CEO Juan Luciano.
Ag Services’ results were in-line with the strong second quarter of 2022, as South American origination results were higher year-over-year.
The team delivered record volumes and higher margins on strong export demand, leveraging its strategic investments in port capacity to capitalize on the record Brazilian soybean crop.
However, results for North American origination were slightly lower year-over-year, driven by lower export volumes due to large South American supplies.
Crushing results were much lower than the record result from the second quarter of last year, with global soy crush margins remaining strong.
However, they were lower year-over-year in all regions due to softer demand for meal and oil and a tight U.S. soybean carryout.
It was partially offset by soft seed solid margins and higher volumes, supported by a strong Canadian canola crop, and the use of the flex capacity in EMEA.
Additionally, approximately US$195 million of negative mark-to-market timing effects in the current quarter are expected to reverse as contracts execute in future periods.
Refined Products and other results were significantly higher than the prior-year period, achieving a record second quarter.
Regionally, North America’s results were higher, driven by strong food oil demand and improved biodiesel volumes.
In Europe, the Middle East, and Africa (EMEA), strong export demand for biodiesel and domestic food oil demand supported stronger margins.
Moreover, approximately US$90 million of positive mark-to-market timing effects in the current quarter are expected to reverse as contracts execute in future periods.
On the other hand, Nutrition results were significantly lower year-over-year versus the record prior-year quarter.
Nutrition achieved strong results in Flavors and drove continued expansion of the customer base and opportunity pipeline, while actively addressing softer demand within other parts of the segment.
“We continued to make progress advancing our strategic initiatives connected to decarbonization, which are helping us build additional earnings power and growth for ADM,” said Luciano.
“Based on our strong first-half results, increased confidence in second-half performance, and our team’s demonstrated ability to execute, we are raising our earnings expectations for full-year 2023.”
Human Nutrition results were in-line with the second quarter of 2022, as the team effectively managed a challenging demand environment.
Specialty Ingredients results were lower year-over-year due to softer demand for plant-based proteins, particularly in the meat alternatives category in North America and Europe.
Animal Nutrition results were much lower compared to the same quarter last year. This was due to significantly lower contribution from amino acids, pockets of softer global feed demand affecting volumes, and continued demand fulfillment challenges and inventory losses in Pet Solutions.
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