Archer Daniels Midland shares opened firm after the ag giant unveiled a 74% jump in earnings, driven by buoyant soybean crush margins and an “outstanding” performance in world trade.

The US-based group, which is with Bunge, Cargill and Louis Dreyfus one of the “ABCD group” of leading ag traders, reported earnings of $1.24bn for the April-to-June quarter, up from $712m a year before.

On a per-share basis, earnings came in at $2.18, ahead of forecasts of a $1.71-per-share result, according to Refinitiv, with ADM foreseeing further upbeat results, allowing it to accelerate a share buyback programme.

“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 Juan Luciano, the ADM chairman and chief executive.

ADM shares gained 5.8% t0 $80.00 in opening deals in New York.

‘Robust demand’

The group’s earnings improvement was led by its core ag services and oilseeds division, which raised operating profit by 96% to $1.12bn, helped in part by one-off timing gains, but also an “outstanding quarter” by its global trade unit.

“The destination marketing team’s ability to meet customer demand around the globe helped drive strong volumes and margins, and good execution in global freight… contributed to significantly higher year-over-year profits,” ADM said.

Crushing profits tripled, also helped by timing effects, but reflecting too “strong” soybean crush margins, “as meal and oil demand remained robust”.

ADM’s nutrition division reported operating profits up 18.9% at $239m, as “healthy demand for alternative proteins resulted in strong soy protein volumes and margins”, while the carbohydrate solutions starch-to-ethanol division raised operating profits by 23% to $473m.

The group noted support to ethanol and sweetener margins from “effective risk management”, besides from orders by foodservice companies, demand from which “reached close to pre-pandemic levels”.

Revenue growth

Group revenues rose by 19.0% to $27.28bn, with the carbohydrate solutions division reporting particular growth, of 33% to $3.75bn.

Ag services and oilseeds revenues, at $21.43bn, stood up 17.3% year on  year, with nutrition revenues gaining 15.6% to $2.00bn.