ADM profit more than doubles on strong crush margins, vegoil demand

The gains came despite weak results from ag services

  

Global grain trader Archer-Daniels-Midland Co said on Tuesday its third-quarter profit more than doubled, as strong oilseed crushing margins and rising vegetable oil demand boosted its core agricultural services and oilseeds unit.

The Chicago-based U.S. grains merchant is anticipating the favorable demand and margin environment to continue supporting results in the fourth quarter and foresees record annual earnings per share for a second straight year.

ADM's latest results offered a glimpse into how the world's largest grain traders are emerging from the COVID-19 pandemic that had triggered massive shifts in food and fuel demand as more people cooked at home and avoided unnecessary travel.

ADM and rival agribusinesses Bunge Ltd, Cargill Inc and Louis Dreyfus Co, known as the ABCD quartet of grain trading giants, are now benefiting from rising global demand for food and renewable fuel as some pandemic restrictions are easing.

Strong vegetable oil demand, including from renewable fuels makers, and favorable margins for crushing soybeans into meal and oil propelled a 42% profit jump for ADM's agricultural services and oilseeds segment, its largest.

The gains came despite weak results from ag services, partly due to delayed exports from the Louisiana Gulf Coast, where terminals sat idle for weeks in September after Hurricane Ida wrecked the region's power grid and damaged infrastructure. 

ADM's carbohydrate solutions unit, which includes its ethanol business, posted weaker earnings amid high corn prices, while results in its nutrition segment rose 20%.

ADM this week announced an agreement with Gevo Inc to produce up to 500 million gallons of sustainable aviation fuel. In August, ADM and Marathon formed a joint venture to make renewable diesel. 

Net earnings attributable to ADM rose 134% to $526 million, or 93 cents per share, in the three months ended Sept. 30, from $225 million, or 40 cents per share, a year earlier.

Revenue rose to $20.34 billion from $15.13 billion.

(Reporting by Karl Plume in Chicago and Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli and David Evans) ((karl.plume@thomsonreuters.com; +1 313 484 5285; Reuters Messaging: karl.plume.thomsonreuters.com@reuters.net))


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