BANGALORE, CHICAGO (Reuters) — Grain trader Archer Daniels Midland Co. posted higher-than-expected quarterly profit on Oct. 31, as increased returns in its nutrition business and improved United States grain marketing efforts helped cushion the impact of sluggish commodity prices, ethanol industry troubles and trade war woes.
Chicago-based ADM and its rivals have been restructuring their businesses after a years-long crop supply glut thinned margins and sapped profits. Adding to the challenges are the U.S.-China trade war and a deadly pig disease that has dampened demand for soymeal in China.
Read Also
Moe’s outlook on Carney, trade challenges
SASKATOON — Scott Moe is in a conciliatory mood. Moe had plenty of kind things to say recently about Canadian Prime Minister Mark Carney, which wasn’t the case with Carney’s predecessor Justin Trudeau.
Lower demand from China, the world’s biggest hog producer and soybean importer, has led to a tightening of ADM’s oilseed processing margins both in the U.S. and South America, and turned the company’s focus toward other export markets, including Vietnam.
African swine fever in China killing millions of pigs also has affected what crops some plants are processing, said ADM chief executive officer Juan Luciano.
While some U.S. customers are planning soymeal production increases, Luciano said, “We’ve seen some of the plants that are dedicated to export in Brazil taking some of that capacity down. We’re seeing some shift in Europe, also, from soybean to rape(seed) just because there is more profitability there.”
Excluding special items, ADM earned 77 cents per share in the third quarter, beating average analyst estimates by 8 cents, according to IBES Refinitiv data.
ADM shares rose nearly three percent to US$41.67.
Adjusted earnings from its carbohydrate solutions segment fell 36.8 percent to $182 million due to lower margins at its ethanol business.
The nutrition business was a bright spot for ADM, with a 76 percent jump in adjusted operating profit, as the company pushes for growth by investing in specialty items such as pea protein and other plant-based, protein-rich ingredients, which supply trendy vegan products.
The company also reported a reduction in its stock-based compensation, which helped bolster quarterly results.
