CHICAGO, Ill. (Reuters) — Archer-Daniels-Midland beat Wall Street expectations on April 25 with a record first-quarter profit, but shares fell 3.9 percent after the grain trader and processor gave full-year earnings guidance that was lower than some analysts expected.
A record-large Brazilian soybean crop fuelled strong exports and helped ADM’s Ag Services and Oilseeds segment, its largest by revenue and volume, turn in a “significantly higher” profit than a year earlier.
ADM forecast 2023 earnings at between US$6 and $7 per share, down from a record $7.85 in 2022 and below some analyst estimates.
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Reduced shipments of some crops because of the war in Ukraine ignited global worries about food insecurity last year. That, coupled with strong demand for food, feed and biofuel, has aided ADM and its agribusiness peers.
The supply chain middle players make money by processing, trading and shipping crops, often thriving when crises such as droughts or war trigger shortages in parts of the world.
“Supply and transportation constraints in the Black Sea region, severe drought in Argentina, the record Brazilian crop and a resurgence of demand in China post-lockdown allowed our team to take full advantage of our global footprint,” chief executive officer Juan Luciano said.
Demand for vegetable oils has soared as biofuel makers have expanded capacity to produce renewable diesel.
But weaker-than-expected oilseed crushing margins in key markets worried some investors.
ADM estimated U.S. crush margins at $55 to $65 per tonne in the first quarter, down from $90 to $100 in the previous quarter.
ADM’s adjusted operating profit from the Ag Services and Oilseeds segment rose to $1.2 billion from $1.01 billion a year earlier.
The strong result eclipsed weaker earnings from ADM’s Nutrition segment and its Carbohydrate Solutions unit, which includes its ethanol business. Ample supplies have weighed on margins for producing the biofuel, ADM said.
