On Tuesday, ADM reported financial results for its second quarter ended June 30, 2023.
According to reports, the results beat Wall Street expectations for second-quarter profit and raised its 2023 earnings outlook, as the company benefited from a record Brazilian harvest and robust global demand.
Results, however, were below ADM's record second quarter in 2022 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. 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, he said.
"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.”
Ag Services & Oilseeds results were strong, but slightly lower than the second quarter of 2022.
- Ag Services results were in-line with the strong second quarter of 2022. South American origination results were higher year-over-year, as the team delivered record volumes and higher margins on strong export demand, leveraging our strategic investments in port capacity to capitalize on the record Brazilian soybean crop. Results for North America origination were slightly lower year-over-year, driven by lower export volumes due to large South America supplies.
- Crushing results were much lower than the record result from the second quarter last year. Global soy crush margins remained strong, but were lower year-over-year in all regions due to softer demand for both meal and oil and a tight U.S. soybean carryout. This was partially offset by strong softseed margins and higher volumes, supported by a strong Canadian canola crop and use of the flex capacity in EMEA. Additionally, there were approximately $195 million of negative mark-to-market timing effects in the current quarter that 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. North America results were higher, driven by strong food oil demand and improved biodiesel volumes. In EMEA, strong export demand for biodiesel and domestic food oil demand supported stronger margins. Additionally, there were approximately $90 million of positive mark-to-market timing effects in the current quarter that are expected to reverse as contracts execute in future periods.
Nutrition results were significantly lower year-over-year versus the record prior-year quarter.
- Animal Nutrition results were much lower compared to the same quarter last year 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.
- 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.
