Archer-Daniels-Midland Co., one of the world’s largest crop traders, reported earnings that blew past analyst estimates following a record soybean harvest in Brazil.
(Bloomberg) — Archer-Daniels-Midland Co., one of the world’s largest crop traders, reported earnings that blew past analyst estimates following a record soybean harvest in Brazil.
Second-quarter earnings excluding some items came to $1.89 a share, the company said in a statement, exceeding even the highest analyst estimate. The results fell short of the record quarter report from a year ago, but it was still the second-best for the three-month period ended in June as the company capitalized on strong export demand in South America.
The company said in a call with analysts that it was boosting its full-year earnings expectations to $7 per share, with potential for “even more upside,” from a previous range of $6 to $7.
ADM’s earnings were fueled by record volumes and higher margins in South America. The company took advantage of increased port capacity in Brazil, the world’s largest soybean exporter — a move that helped offset “much lower” margins on oilseed crushing, it said. All in all, the result was a statement of how profitable global agricultural commodity trading remains amid persistent high prices and supply disruptions amid the war in Ukraine.
“Certainly we are more confident about the environment ahead of us,” Chief Executive Officer Juan Luciano said during the call. The company’s spending on port capacity in Brazil is paying off as the country reaps bumper crops at a time of increased price fluctuations in agricultural commodity prices, he added. “All that volatility and all that uncertainty increase the value of our investments.”
Brazil’s soybean output this year was estimated at a record 156 million metric tons, with roughly 60% of it set to be exported, according to the US Department of Agriculture.
ADM also benefited from strong food-oil demand and improved biodiesel volumes, a trend that is set to continue in the second half of 2023, Luciano said.
Crush margins remain strong even as they have declined amid softer demand for both oil and meal globally, Chief Financial Officer Vikram Luthar said during the call.
The company’s stock rose 1.8% at 10:14 a.m. in New York.
ADM is the first among the world’s biggest agricultural trading houses, known as the ABCDs, to report earnings. The group includes Bunge Ltd., which will release earnings on Aug. 2, plus closely held Cargill Inc. and Louis Dreyfus Co.
(Updates with comments from company call starting in the third paragraph)
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