ADM: reports Q1-2022 financial results

Chicago / IL. (adm) Archer Daniels Midland Company (ADM) reported financial results for the quarter ended March 31, 2022. «I’m very proud of how our team lived our culture and fulfilled our purpose over the last quarter, as they continued to serve the world’s need for nutrition in a dynamic global environment,» said Chairman and CEO Juan Luciano. «Our first quarter financial results, including adjusted earnings per share of USD 1.90, reflect an extension and amplification of the factors that drove our 2021 performance: great execution by our team, including exceptional growth in Nutrition and effective risk management; a tighter supply environment, especially with the smaller South American crop; and robust and resilient demand. Importantly, I’m also very appreciative of how our company has rallied to support our colleagues in Ukraine and the country’s agriculture industry.

«Looking forward, we expect reduced crop supplies – caused by the weak Canadian canola crop, the short South American crops, and now the disruptions in the Black Sea region – to drive continued tightness in global grain markets for the next few years. Longer term, markets continue to reflect the importance of the enduring global trends that are fueling performance across our portfolio by driving demand for our products. And within ADM, our productivity and innovation efforts are continuing to help us deliver on the evolving needs of our customers. Considering these factors, we expect 2022 results to exceed 2021’s.»

First Quarter 2022 Highlights

(Amounts in millions except per share amounts)
2022
2021
Earnings per share (as reported) USD 1.86 USD 1.22
Adjusted earnings per share USD 1.90 USD 1.39
Segment operating profit USD 1,539 USD 1,105
Adjusted segment operating profit (loss) USD 1,556 USD 1,199
Ag Services and Oilseeds 1,008 777
Carbohydrate Solutions 317 259
Nutrition 189 154
Other Business 42 9

Q1 2022 EPS as reported of USD 1.86 includes a USD 0.02 per share net charge related to impairments, restructuring, and settlement; a USD 0.03 per share loss related to the mark-to-market adjustment on the Wilmar exchangeable bond; and a USD 0.01 per share tax benefit related to certain discrete items. Adjusted EPS, which excludes these items, was USD 1.90.

Quarterly Results of Operations

Ag Services + Oilseeds delivered substantially higher year-over-year results, effectively managing risk and executing exceptionally well in a dynamic environment of robust global demand and tight supply, driven primarily by the short South American crop, to deliver substantially higher year-over-year results.

  • Ag Services results were significantly higher versus the first quarter of 2021. Global Trade results were higher, driven by strong performances in destination marketing and global ocean freight. North American origination margins and volumes were lower year over year, including approximately USD 75 million in negative timing effects, which will reverse in the coming quarters.
  • Crushing was higher year over year in a strong global margin environment driven by robust protein and vegetable oil demand. Improving margins in the quarter resulted in approximately USD 60 million in negative timing effects – which will reverse in the coming quarters – versus approximately USD 50 million in positive timing in the prior-year quarter.
  • Refined Products and Other results were much higher than the prior-year period, driven by healthy refining premiums and good refined oils demand in North America, as well as strong biodiesel margins in EMEA.
  • Equity earnings from Wilmar were significantly higher versus the first quarter of 2021.

Carbohydrate Solutions delivered results that were substantially higher year over year.

  • The Starches and Sweeteners subsegment, including ethanol production from our wet mills, delivered much higher results versus the prior-year quarter, driven by higher corn co-product revenues and improved citric acid profits in North America; higher volumes and margins in EMEA; and higher volumes and margins in wheat milling. Sales volumes for starches and sweeteners continued their recovery.
  • Vantage Corn Processors delivered solid execution margins, but position losses on ethanol inventory as prices fell early in the quarter drove lower results versus the prior year. The prior-year quarter’s results also benefited from demand for USP-grade industrial alcohol from the Peoria facility, which was divested in Q4 2021.

Nutrition delivered extremely strong revenue growth of 23 percent and maintained healthy margins, driving substantially higher results.

  • Human Nutrition delivered higher year-over-year results. Flavors continued to deliver solid revenue growth, offset by some higher costs. Strong sales growth in alternative proteins, including accretion from our Sojaprotein acquisition, and positive currency timing impacts in South America, offset some higher operating costs to help deliver better year-over-year results in Specialty Ingredients. Health + Wellness was also higher year over year, powered by probiotics, including contributions from our late-2021 Deerland Probiotics acquisition, and robust demand for fiber.
  • Animal Nutrition profits were nearly double the year-ago period, due primarily to strength in amino acids, which was driven by a combination of product mix changes, improved North American demand and global supply chain disruptions.

Other Business results were substantially higher, driven primarily by better performance in captive insurance, including reduced claim settlements versus the prior year.

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