Strong ethanol demand and US grain exports pushed up second-quarter profits at Archer Daniels Midland despite hoarding by farmers in South America and weak oilseed results at affiliate Wilmar.
The profit figures followed weaker than expected first-quarter results because of poorer margins and adverse winter weather affecting the grain operations of the international agricultural trader and commodities processor.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail.
A good grain harvest worldwide this year is expected to boost profitability at international grains companies, allowing them to buy and store the crop at a cheaper price to sell later in the year.
“Today, the crops in North America and Europe are developing nicely, so we are preparing for what could be very large harvests,” said Patricia Woertz, ADM’s chief executive.The company is also expected to make an announcement of the sale of its chocolates business in the third quarter and will complete the €2.3bn purchase of Wild Flavors, a speciality food and drinks flavour company, at the end of the third quarter or the fourth quarter.
ADM said net earnings for the three months to June rose almost 2.5 times to $533m. This took the half-year earnings figure to $800m, almost double the $492m earned during the same period last year.
“We capitalised on robust ethanol demand, a recovery of US grain export volumes and continuing strong demand for oilseeds products,” said Ms Woertz.
Corn processing, ADM’s largest division, reported a 55 per cent rise in operating profits to $347m for the second quarter, thanks to a 45 per cent rise in biofuels to $141m and a 22 per cent increase in sweetener sales.
Its oilseeds operations posted three-month operating profits of $327m, up 2 per cent, helped by a strong North American processing business. South American processing results were weaker because of “slower farmer selling”, while in Asia, Wilmar, the leading food oil processor in the region, reported lower results.
Agricultural services jumped from $81m to $203m on a strong rise in the merchandising and handling business, which posted operating profits of $115m, compared with $14m the same time last year.
(Source – http://www.blackseagrain.net/novosti/us-grain-export-recovery-boosts-adm_)