ADM Posts 76% Q1 Profit Jump

ADM reported a 76.2% rise in first-quarter profit on Tuesday, as the company benefited from growth in its agricultural services and carbohydrate solutions businesses.

“ADM delivered an outstanding first quarter, building on our great 2020 performance," says Chairman and CEO Juan Luciano. "As expected, we achieved strong earnings spanning all three of our businesses, and a sixth consecutive quarter of year-over-year adjusted operating profit growth."

Quarterly Results of Operations

Ag Services & Oilseeds achieved a record Q1, with operating profits 84% higher year over year.

• Ag Services results were significantly higher versus the first quarter of 2020. In North America, great execution helped capitalize on strong Chinese demand, resulting in an outstanding performance. South American origination results were down significantly due to lower farmer selling versus the prior year. Lower margins, including impacts from the slightly delayed harvest and higher freight costs, also affected South American results. Results for the quarter were impacted by approximately $75 million in negative timing effects related to ocean freight positions; those impacts will reverse in the coming quarters.

• Crushing delivered its best quarter ever, as the business leveraged its diversified global footprint to capture strong execution margins in both soybean and softseed crushing, driven by robust vegetable oil demand and tight soybean stocks. Net timing impacts for the quarter were minimal.

• Refined Products and Other results were higher year over year. While overall volumes were down due to pandemic impacts, margins were stronger in both North America and EMEAI refined oils. Global biodiesel results were lower year over year.

• Equity earnings from Wilmar were lower versus the prior-year period.

¹ Non-GAAP financial measures; see pages 5, 10, 11 and 12 for explanations and reconciliations, including after-tax amounts.

Carbohydrate Solutions results were significantly higher than the prior-year period.

• Starches and Sweeteners, including ethanol production from our wet mills, achieved significantly higher results. The business managed risk exceptionally well, capitalizing on rising prices in the ethanol complex and favorable co-product values in an industry environment of improving margins and falling inventories. Corn oil results were significantly higher than the previous year, which had been impacted by substantial mark-to-market effects. In general, though demand for sweeteners and flour by the foodservice sector remained below the prior year, there were signs of acceleration in March.

• Vantage Corn Processors results were substantially higher, driven by improved margins on the distribution of fuel ethanol and strong performance in USP-grade industrial alcohol.

Nutrition delivered solid year-over-year operating profit growth.

• Human Nutrition results were significantly higher than the prior-year quarter. Flavors had an exceptional quarter, driven by strong sales across various market segments, especially beverages. Favorable product mix in North America, improved margins in EMEAI, and accelerated income from a customer agreement also contributed to results, partially offset by certain specific expenses. Specialty Ingredients results were lower, primarily driven by demand factors, including the effect of pantry loading in the previous-year quarter and shifts in demand for texturants. Health and Wellness had a strong start to the year, with robust demand driving higher results in probiotics and fibers.

• Animal Nutrition results were lower versus the first quarter of 2020, driven primarily by lower demand and higher input costs as a result of pandemic effects, primarily in South America. This was partially offset by favorable results in amino acids, driven by improved product mix.

Other Business results were lower than the prior-year period, driven by lower Captive Insurance underwriting results, partially offset by more favorable ADMIS earnings.

“Our team executed well across the board, as we continued to find new and innovative ways to meet the evolving needs of our customers," says Luciano. "We are seeing clear, favorable demand trends for many of our products, and we expect that pattern to continue as vaccine rollouts accelerate and restrictions ease.

Luciano says the company is also moving into the next phase of its strategic transformation, which will sharpen its focus on two key pillars — Productivity and Innovation — to enhance capabilities to deliver outstanding execution, serve customer needs, and power growth and profitability.

“Taking all of these factors into account, our outlook today is even more optimistic than what we shared at the beginning of the year," he says. "We expect significant year-over-year growth in earnings across all three of our businesses in 2021, and continued sustainable growth in the years to come.”

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