Demand for ‘green diesel’ boosts ADM earnings
https://www.world-grain.com/articles/15609-de...m-earnings
CHICAGO, ILLINOIS, US — The increasing use of vegetable oils for biofuel in the transportation industry provided a boost to second-quarter earnings for ADM and will keep the Chicago, Illinois, US-based company investing in that area.
Net earnings attributable to ADM in the quarter ended June 30 were $712 million, or $1.26 diluted earnings per share on the common stock, which was up 52% from $469 million, or 84¢ per share, in the previous year’s second quarter. Net revenue rose 41% to $22.93 billion from $16.28 billion.
ADM plans to build a $350 million dedicated soybean crushing plant and refinery in Spiritwood, North Dakota, US.
“We expect the demand for US green diesel to continue securing higher rate of growth, increasing by about 1 billion gallons per year and reaching up to 5 billion gallons by 2025,” said Juan R. Luciano, president and chief executive officer, in a July 27 earnings call. “Vegetable oils will be a key feedstock to meet that growing demand, and when you consider that it takes about 7.5 lbs of soybean oil to produce 1 gallon of renewable green diesel, you can appreciate the large potential opportunity and why we are investing to grow our participation both in North Dakota and with our expanded oil refining capacity in Quincy, Illinois.”
Sustainable aviation fuel (SAF) could become another growth area.
“We are looking at the possibility of leveraging our Decatur, Illinois, carbon sequestration site, which Juan talked about, with our corn processing output as a feedstock for SAF to get towards a low-carbon SAF product,” said Ray Guy Young, executive vice president and chief financial officer.
In ADM’s Ag Services & Oilseeds business, adjusted operating profit of $570 million was 38% higher than $413 million in the previous year’s second quarter. Net revenue jumped 43% to $18.27 billion from $12.74 billion. The North American origination business, driven by corn sales to China, delivered higher export volumes. Global trade performance was lower when compared to a strong performance in the previous year’s second quarter.
Crushing results were higher year-over-year as strong vegetable oil demand led to higher execution margins in North American soy and EU softseeds.
“We are very optimistic about the prospects for crush for the rest of the year and into next year, and if I go by geography, as I always do, from a North American perspective, margin remains exceptionally strong in North America in the $45-to-$50 range,” Luciano said.
In ADM’s Carbohydrate Solutions business, adjusted operating profit nearly doubled to $383 million from $195 million in the previous year’s second quarter. Net revenue increased 40% to $2.82 billion from $2.01 billion. Within Carbohydrate Solutions, the starches and sweeteners segment delivered higher year-over-year results, driven by about $90 million in positioning gains across the ethanol complex and more normalized results from corn oil. Sweetener volumes were higher as demand from the foodservice channel began to recover.
Vantage Corn Processors’ results were higher than the previous year’s second quarter as two dry mills resumed production and fuel ethanol margins improved.
In the Nutrition business, adjusted operating profit rose 27% to $201 million from $158 million. Revenue increased 21% to $1.73 billion from $1.44 billion.
In the human nutrition segment, operating profit was up 24% while revenues were 13% higher. The flavors business delivered strong volumes and improved product mix, especially in beverages. Specialty ingredients reported strong growth, especially in proteins, although results were lower due to certain one-time costs, mainly in texturants. The day before reporting second-quarter results, ADM reached an agreement to acquire Sojaprotein, a European provider of non-GMO soy ingredients.
“Sojaprotein is a perfect fit for our growth strategy,” Luciano said. “It represents a strategic addition to our global protein production capacity. It is a successful growing company with 2020 sales of more than $100 million and an extensive list of customers in 65 countries in the meat alternative, confectionery, protein bar, pharmaceutical, pet food and animal feed segments.”
In Other, operating profit dropped to $6 million from $38 million in the previous year’s second quarter. Net revenue increased 15% to $102 million from $89 million.
Over the first six months of the fiscal year, ADM companywide reported net earnings of $1.4 billion, or $2.48 diluted earnings per share on the common stock, which was up 63% from $860 million, or $1.53 per share, in the same time of the previous year. Net revenue rose 34% to $41.82 billion from $31.25 billion.
https://www.world-grain.com/articles/15609-de...m-earnings
CHICAGO, ILLINOIS, US — The increasing use of vegetable oils for biofuel in the transportation industry provided a boost to second-quarter earnings for ADM and will keep the Chicago, Illinois, US-based company investing in that area.
Net earnings attributable to ADM in the quarter ended June 30 were $712 million, or $1.26 diluted earnings per share on the common stock, which was up 52% from $469 million, or 84¢ per share, in the previous year’s second quarter. Net revenue rose 41% to $22.93 billion from $16.28 billion.
ADM plans to build a $350 million dedicated soybean crushing plant and refinery in Spiritwood, North Dakota, US.
“We expect the demand for US green diesel to continue securing higher rate of growth, increasing by about 1 billion gallons per year and reaching up to 5 billion gallons by 2025,” said Juan R. Luciano, president and chief executive officer, in a July 27 earnings call. “Vegetable oils will be a key feedstock to meet that growing demand, and when you consider that it takes about 7.5 lbs of soybean oil to produce 1 gallon of renewable green diesel, you can appreciate the large potential opportunity and why we are investing to grow our participation both in North Dakota and with our expanded oil refining capacity in Quincy, Illinois.”
Sustainable aviation fuel (SAF) could become another growth area.
“We are looking at the possibility of leveraging our Decatur, Illinois, carbon sequestration site, which Juan talked about, with our corn processing output as a feedstock for SAF to get towards a low-carbon SAF product,” said Ray Guy Young, executive vice president and chief financial officer.
In ADM’s Ag Services & Oilseeds business, adjusted operating profit of $570 million was 38% higher than $413 million in the previous year’s second quarter. Net revenue jumped 43% to $18.27 billion from $12.74 billion. The North American origination business, driven by corn sales to China, delivered higher export volumes. Global trade performance was lower when compared to a strong performance in the previous year’s second quarter.
Crushing results were higher year-over-year as strong vegetable oil demand led to higher execution margins in North American soy and EU softseeds.
“We are very optimistic about the prospects for crush for the rest of the year and into next year, and if I go by geography, as I always do, from a North American perspective, margin remains exceptionally strong in North America in the $45-to-$50 range,” Luciano said.
In ADM’s Carbohydrate Solutions business, adjusted operating profit nearly doubled to $383 million from $195 million in the previous year’s second quarter. Net revenue increased 40% to $2.82 billion from $2.01 billion. Within Carbohydrate Solutions, the starches and sweeteners segment delivered higher year-over-year results, driven by about $90 million in positioning gains across the ethanol complex and more normalized results from corn oil. Sweetener volumes were higher as demand from the foodservice channel began to recover.
Vantage Corn Processors’ results were higher than the previous year’s second quarter as two dry mills resumed production and fuel ethanol margins improved.
In the Nutrition business, adjusted operating profit rose 27% to $201 million from $158 million. Revenue increased 21% to $1.73 billion from $1.44 billion.
In the human nutrition segment, operating profit was up 24% while revenues were 13% higher. The flavors business delivered strong volumes and improved product mix, especially in beverages. Specialty ingredients reported strong growth, especially in proteins, although results were lower due to certain one-time costs, mainly in texturants. The day before reporting second-quarter results, ADM reached an agreement to acquire Sojaprotein, a European provider of non-GMO soy ingredients.
“Sojaprotein is a perfect fit for our growth strategy,” Luciano said. “It represents a strategic addition to our global protein production capacity. It is a successful growing company with 2020 sales of more than $100 million and an extensive list of customers in 65 countries in the meat alternative, confectionery, protein bar, pharmaceutical, pet food and animal feed segments.”
In Other, operating profit dropped to $6 million from $38 million in the previous year’s second quarter. Net revenue increased 15% to $102 million from $89 million.
Over the first six months of the fiscal year, ADM companywide reported net earnings of $1.4 billion, or $2.48 diluted earnings per share on the common stock, which was up 63% from $860 million, or $1.53 per share, in the same time of the previous year. Net revenue rose 34% to $41.82 billion from $31.25 billion.
