ADM profit tops estimates on export sales, oilseeds

The Archer Daniels Midland Co. (ADM) logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2018.
 Photo: REUTERS/Brendan McDermid

Reuters – Archer Daniels Midland Co reported a bigger-than-expected quarterly profit on Tuesday, as the U.S. grain merchant made export sales to buyers in countries other than China during an escalating trade war between Washington and Beijing.

Strong margins for oilseeds crushing also boosted earnings.

The United States and China have imposed tariffs on hundreds of billions of dollars of each other’s goods as part of a tit-for-tat trade row between the world’s top two economies.

Farm products have been caught in the crossfire, and U.S. soy sales to China have all but stopped since Beijing introduced a 25-percent import duty on U.S. soybeans in July.

Still, ADM had strong export sales to customers in markets outside of China in the quarter ended on Sept. 30.

“In North America, the business managed risk well in a volatile price environment,” ADM said.

ADM is among four companies that dominate the flow of agricultural goods around the world, competing against rivals Bunge Ltd, Cargill Inc and Louis Dreyfus Corp .

Margins for processing soybeans into soymeal and oil remain favorable for these grain handlers, although the trade war and a large U.S. soy harvest have pressured soybean prices.

Operating profits for ADM’s oilseeds business more than tripled to $349 million as the company said it set a new record for crush volumes in the quarter.

“Record U.S. yields along with reduced export demand have kept a lid on CBOT soybean prices while demand for soy meal remains robust,” JP Morgan analyst Ann Duignan said.

Net profit attributable to ADM rose to $536 million, or 94 cents per share, in the quarter ended Sept. 30, from $192 million, or 34 cents per share a year earlier.

Excluding one-time items, the company earned 92 cents per share, beating analysts’ average estimate of 83 cents, according to IBES data from Refinitiv.

Revenue rose to $15.80 billion from $14.83 billion.

– Additional reporting by Debroop Roy in Bengaluru.

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