ADM profit up nearly 14% on strong biofuel demand and ethanol margins

By Karl Plume

(Reuters) -Global grain trader Archer-Daniels-Midland Co reported a jump of nearly 14% in fourth-quarter earnings on Tuesday as rising biofuel demand and strong ethanol margins helped to boost operating profit at its carbohydrate solutions division.

High energy and grain costs, however, clipped earnings at the corn-processing unit, as well as its core ag services and oilseeds segment where operating profit fell from the same quarter a year earlier.

Shares were flat in pre-margin trading.

ADM’s results offer a look into how the world’s biggest grain traders are weathering the shifts in food and fuel demand triggered by the pandemic and soaring inflation.

ADM and rival agribusinesses Bunge (NYSE:) Ltd, Cargill Inc and Louis Dreyfus Co, together known as the ABCD quartet of grain trading giants, have benefited from rising demand for food and renewable fuel as economies reopen.

But surging prices for the grain and oilseeds ADM buys, sells, processes and ships around the globe have presented a challenge.

ADM said earnings in ag services and oilseeds, its largest unit by revenue, were propelled by strong demand for soymeal and vegetable oil. But the unit’s results were dented by about $250 million in net negative timing effects in crushing, which the company expects to recoup in the first half of 2022.

High corn and energy costs held back earnings in sweeteners and starches, but the resumption of ADM’s dry corn ethanol mills after pandemic closures helped its carbohydrate solutions unit more than double its operating profit.

ADM’s expanding nutrition unit posted stronger results.

ADM’s net earnings rose to $782 million, or $1.38 per share, in the quarter ended Dec. 31, from $687 million, or $1.22 per share, a year earlier.

Excluding one-time items, earnings of $1.50 a share topped the consensus analyst estimate of $1.37, according to Refinitiv Eikon data.