ADM profit surges 74% on strong productivity initiatives

USA— Net earnings attributable to ADM in the second quarter totaled US$1.24 billion, up 74% from US$712 million in the same period a year ago, on strong productivity initiatives.

Revenues for the second quarter increased 19%, climbing to US$27.28 billion from US$22.93 billion. The stronger earnings sent ADM’s share price up nearly 6% in mid-day trading on the New York Stock Exchange on July 26, climbing as high as US$80 per share before closing at US$78.92, up from US$75.62 on July 25.

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“Productivity is how we are improving our execution and optimizing costs is key to our long-term success, but equally as importantly, our productivity work is helping us mitigate the impact of inflation. We have a very strong pipeline of productivity initiatives,” said Chairman and CEO Juan Luciano.

Luciano highlighted two of the initiatives. The first one, he explained, is a set of operational transformation efforts that ADM is driving across production facilities around the world and spanning all three of its businesses.

An example is the modernization project in its Marshall, Minnesota, US, corn facility, an investment in which, Mr. Luciano said ADM is already seeing double-digit returns.

A second initiative involves a challenge launched by the company aimed at monetizing assets and optimizing working capital to unlock another US$1 billion in cash, in a bid to continue to drive returns. Luciano reported that ADM has already realized more than US$400 million.

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Operating profit in the Ag Services and Oilseeds segment surged 97% in the second quarter of fiscal 2022, climbing to US$1.12 billion. Ag services profit rose 114% during the quarter to US$407 million, while crushing profit increased 212% to US$468 million. ADM’s ability to meet customer demand around the globe helped drive strong volumes and margins in the segment.

Nutrition delivered 19% higher year-over-year operating profit. Human Nutrition delivered higher year-over-year results as demand across its diverse product portfolio remained robust. Animal Nutrition profits were up substantially year over year, driven by continued strong volumes and margins in amino acids.

Operating profit in the Carbohydrate Solutions segment increased 23% in the second quarter to US$473 million. Starches and sweeteners profit increased 28%, climbing to US$393 million due to solid demand as food service volumes reached close to pre-pandemic levels. Vantage Corn Processors results were slightly higher in an environment of good gasoline demand and strong ethanol blending economics.

Looking forward, Luciano said the company expects the combination of its strategic actions and continued good demand for products to propel very strong earnings in the second half of 2022.

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