ADM’s nutrition segment forecast to underlie bulk of future growth in profits

USA— Nutrition makes up about 15% of the operating profit at ADM However, the top ADM’s Chicago-based executives have been praising the platform’s potential to be the engine behind the bulk of the growth in profits in the coming years.

In the Nutrition segment operating profit increased 23% to US$189 million in the first quarter of fiscal 2022, up from $154 million a year ago, targeting US$1.25-US$1.5Billion in operating profit by 2025.

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“Much of the optimism stems from the fact ADM sees a clear runway to growth of 15% to 20% over the next 5 to 10 years,” Juan R. Luciano, president and chief executive officer, said.

ADM has a broad portfolio of products to contribute to nutrition, but more importantly, Mr. Luciano said, is the fact the company entered the category with a plan.

“Not only (do) we have the best pantry, but we have the fastest speed to get the customer or the marketing department of a customer to a product to be launched in a few months. And that, I think, was the recipe for this accelerated growth,” he added.

ADM steadily has expanded its presence in nutrition, beginning with human nutrition, beverages and food, and gradually adding pet and biomaterials.

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Luciano said a “high proportion” of the $1.3 billion in capital that ADM plans to spend in 2022-23 is earmarked for nutrition.

However, he stopped short of saying that the company has any plans for a major acquisition in the category over the next five years.

“We continue to think of ourselves as organic growth and some bolt-on M&A,” he said. “I think these last 10 years of cheap money have exacerbated valuations in the nutrition space.

So, we try to be very targeted and very shy in terms of how much M&A we put into that. We think that those valuations may correct, and then we can flex our balance sheet.”

ADM’s nutrition segment serves various end markets, including food, beverages, nutritional supplements, and feed and premix for livestock, aquaculture, and pet food in addition to providing food and savory products.

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