ADM’s Q2 profits surge 74% y-o-y on high grain demand, tight supply

26 Jul 2022 | Cai Chen

Net earnings for global agricultural commodities producer and trader Archer-Daniels-Midland Co. (ADM) surged by 74% in the second quarter of 2022 compared with the same period of last year, to $1.24 billion, or $2.18 per share ($2.15 on an adjusted basis), the company said on Tuesday.

ADM’s net earnings in the first six months ended June 30 reached $2.3 billion, up 64% from $1.4 billion in the previous year.

The increases came as the firm benefited from higher demand and tighter supplies after Russia’s invasion of Ukraine blocked grain export from the Black Sea regions.

ADM achieved “exceptional results” in its Ag Services & Oilseeds segment, with an operating profit in the second quarter nearly doubling versus a year ago to $1.12 billion.

Within the segment, operating profit in Ag Services reached $407 million, jumping over 114% from $190 million recorded in the previous year.

“The destination marketing team’s ability to meet customer demand around the globe… contributed to significantly higher year-over-year profits,” the company said in its quarterly financial statement.

“North America had a solid performance as export volumes remained strong in a good global demand environment… South America results were higher, based on stronger origination volumes and better margins driven by strong global grain demand,” it added.

The crushing business delivered higher year-on-year increases in operating profit, with a surge of 212% to $468 million, on “strong soy crush margins” underpinned by robust meal and oil demand.

Operating profit in the first half of 2022 for Ag Services & Oilseeds came in at $2.13 billion, up $780 million from $1.35 billion in the previous year.

In the Carbohydrate Solutions segment, Q2 operating profit jumped 23.5% from the same period last year to $473 million on solid demand for ethanol and corn oil and higher ethanol and sweetener margins.

The nutrition segment delivered a 16% revenue growth to over $2 billion and a 19% higher year-on-year operating profit.

“Healthy demand for alternative proteins resulted in strong soy protein volumes and margins, as contributions from the Sojaprotein acquisition, as well as good demand for texturants, drove higher results in Specialty Ingredients,” the report said.

ADM's total revenue in the second quarter of 2022 reached $27.3 billion, up 27% from $22.9 billion in the same period of last year.

“Looking forward, we expect the combination of our strategic actions and continued good demand for our products to propel very strong earnings in the second half of 2022,” said Chairman and CEO Juan Luciano.