Oct 26, 2021

ADM Profit More Than Doubles in Q3

Ag Services & Oilseeds delivered substantially higher results versus the third quarter of 2020

source: ADM

ADM has reported financial results for the quarter ended September 30, 2021.

  • Q3 net earnings of $526 million; adjusted net earnings of $548 million
  • Segment operating profit of $1.0B
  • Adjusted EPS up 9% despite higher effective tax rate
  • Continued momentum, on track for strong Q4

“Agile execution across our tightly integrated supply chain amid an environment of strong demand and robust crush margins, and continued impressive growth in Nutrition, drove our eighth consecutive quarter of year-over-year adjusted operating profit growth,” says Chairman and CEO Juan Luciano.

“Our team’s great ability to leverage the favorable operating environment, and the consistent implementation of our strategic plan, have put ADM on track for a strong fourth quarter culminating in a second consecutive year of record earnings per share. And as we look ahead, we remain optimistic in sustainable earnings growth in the medium term as we continue to execute our strategy, including the dynamic positioning of our business portfolio.”

ADM has made a series of strategic growth and portfolio announcements in recent months, including significantly enhancing its growing pet business with a 75% ownership stake in PetDine, and continuing to advance its evolution to higher-value sustainable solutions in Carbohydrate Solutions with the sale of the Peoria ethanol complex; an MoU with Gevo, Inc. for the production of sustainable aviation fuel; and an agreement with LG Chem to explore U.S.-based production of plant-based biosolutions.

Quarterly Results of Operations

Ag Services & Oilseeds delivered substantially higher results versus the third quarter of 2020.

  • Ag Services executed well in a challenging environment, including a rapid return to operation after Hurricane Ida. Overall results were significantly lower versus the prior-year quarter, driven by approximately $50 million in net negative timing effects that should reverse in coming quarters; a $54 million insurance settlement recorded in the prior-year period; and lower export volumes caused by Hurricane Ida. Global Trade continued its strong performance.
  • Crushing had substantially higher year-over-year results. The team executed well, delivering stronger margins in a dynamic environment that included strong demand for vegetable oil to support our existing food customers as well as increasing production of renewable diesel. Results were also driven by approximately $70 million in net positive timing effects in the quarter.
  • Refined Products and Other results were significantly higher than the prior-year period, driven by positive timing effects of approximately $80 million that are expected to reverse in future quarters, along with strong execution in EMEA and NA biodiesel and strong refining premiums due to demand for renewable diesel and foodservice recovery in North America.
  • Equity earnings from Wilmar were lower versus the third quarter of 2020.

Carbohydrate Solutions results were lower year over year.

  • Starches and Sweeteners, including ethanol production from our wet mills, managed through dynamic market conditions, optimizing mix between sweeteners and ethanol production through the quarter. Year-over-year results were significantly lower primarily due to higher input costs.
  • Vantage Corn Processors results were much higher versus the third quarter of 2020, supported by the resumption of production at our two dry mills and improved fuel ethanol margins, particularly late in the quarter.

Nutrition delivered another strong performance, with revenue growth of 17% helping drive 20% higher year-over-year operating profits.

  • Human Nutrition delivered 9% higher profits. Higher volume and improved product mix, with particular strength in beverage, drove strong Flavors results in EMEA and North America, partially offset by lower results in APAC. Specialty Ingredients continued to benefit from strong demand for alternative proteins, offset by some higher costs. Health & Wellness results were higher on robust sales growth in bioactives and fiber.
  • Animal Nutrition profits were nearly double the year-ago period, driven primarily by strength in amino acids as well as feed additives and ingredients, partially offset by higher costs in LATAM and slower demand recovery in APAC.

Other Business results were substantially lower than the prior-year period, driven primarily by captive insurance underwriting losses, most of which were offset by corresponding recoveries in other business segments.

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Marketwatch: Nov, 30

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