Animal nutrition helps deliver record Q2 earnings for ADM

By Jane Byrne

- Last updated on GMT

© GettyImages/matejmo
© GettyImages/matejmo

Related tags China oilseed crushing Soybean meal

Archer-Daniels-Midland’s quarterly profit jumped on strong corn sales to China and oilseed crushing margins.

Yesterday saw ADM release its financial results for the quarter ending June 30. It reported Q2 net earnings of US$712m and adjusted net earnings of US$754m. 

“It was yet another excellent quarter for ADM, as our team delivered record earnings, with strong year-over-year profit growth across all three business units,”​ said CEO, Juan Luciano.

“This is a very different ADM than even a few short years ago,”​ he added.

The agribusiness group’s soybean crushing operations are benefiting from strong vegetable oil demand and North American margins, he said. Results were partially offset by weaker soybean crush margins in South America though.

“We are very optimistic about the prospects for crush for the rest of the year and into next year. Margins remain exceptionally strong in North America in the US$45-50 range. There is a strong vegetable oil demand; we see recovery in food service and more reopening of the economy, and that continues to enhance the oil share of the crush contribution. Also, the tightening supplies in logistical issues in South America are allowing US soybean meal to be a little bit more competitive in global markets,”​ said the CEO on a conference call with analysts yesterday, where he also noted consolidation in the global soy crush industry. 

Soybean meal demand has gone lower in China, he said. “The herd is going through a rebalancing there, and, at the moment, there is a lot of wheat feed being fed,”​ acknowledged Luciano.

ADM, though, expects higher inclusion levels of corn and soybean meal in feed formulations in China in the coming period.

Animal nutrition revenue buoyant

The group’s nutrition business delivered a record Q2, with 15% revenue growth and 27% higher year-over-year profits

Animal nutrition revenue was 17% higher year over year on a constant currency basis and profits were up 44% as improved demand and margins in amino acids, strength in feed additives and ingredients, and better performance in EMEA more than offset COVID-19 and labor-related impacts in other regions, said the US headquartered company.

ADM is raising expectations for full-year profit growth to 20% for nutrition.

“We’re excited about our growth trajectory as we continue to expand our participation in large and fast-growing categories, from alternative proteins to renewable green diesel to plant-based biosolutions, with all of our strategic efforts underpinned by our unique opportunity to use ADM’s integrated value chain to advance decarbonization of the food and agriculture industries.

“Given our great start to the year and our expectation of continued momentum in the second half, we are confident in delivering very strong full-year earnings,”​ said Luciano.

Acquisition of non-GMO ingredients producer

This week also saw ADM announce the acquisition of Sojaprotein, a Serbia based non-GMO soy ingredient supplier. "Sojaprotein is a perfect fit for our growth strategy,"​ said the CEO.

Sojaprotein has sales into 65 countries, offering non-GMO vegetable protein ingredients for European and global customers in the meat alternative, confectionary, protein bar, pharmaceutical, pet food, and animal feed segments. The company had more than $100m in sales in 2020.

The deal will build on ADM’s recent investments in alternative proteins, including the company’s soy protein complex in Campo Grande, Mato Grosso do Sul, Brazil; its new pea protein plant in Enderlin, North Dakota; its PlantPlus Foods joint venture; and partnerships with innovative startups like Air Protein. 

Carbon capture 

The CEO also spoke about the a carbon capture and storage (CCS) project that ADM has been involved in for the past few years, and how it will be increasingly focused on these kind of initiatives going forward.  

"Late last year, our Decatur-based carbon capture and storage partnership, the world's first large-scale project to store carbon from a biofuel source, surpassed 3m metric tons of carbon dioxide safely and permanently stored more than a mile under the Earth's surface. That's the equivalent of removing about 650,000 cars from the road for a full year. And this is going to be a growing part of our operations, for sure."

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