Archer-Daniels-Midland Co beat Wall Street expectations on Tuesday with a record first-quarter profit but shares fell 3.9% after the grains trader and processor gave full-year earnings guidance that was lower than some analysts expected.
A record-large Brazilian soybean crop fueled strong exports and helped ADM's Ag Services and Oilseeds segment, its largest by revenue and volumes, turn in a "significantly higher" profit than a year earlier.
ADM forecast 2023 earnings at between $6 and $7 per share, down from a record $7.85 in 2022 and below some analyst estimates. Its shares were down 3.9% at $77.65 at midmorning.
Reduced shipments of some crops due to the war in Ukraine ignited global worries about food insecurity last year. That, coupled with strong demand for food, feed and biofuel, has aided ADM and its agribusiness peers.
The supply chain middlemen make money by processing, trading and shipping crops, often thriving when crises such as droughts or war trigger shortages in parts of the world.
"Supply and transportation constraints in the Black Sea region, severe drought in Argentina, the record Brazilian crop and a resurgence of demand in China post lockdown allowed our team to take full advantage of our global footprint," CEO Juan Luciano said.
Demand for vegetable oils has soared as biofuel makers have expanded capacity to produce renewable diesel.
But weaker-than-expected oilseed crushing margins in key markets worried some investors.
ADM estimated U.S. crush margins at $55 to $65 per tonne in the first quarter, down from $90 to $100 in the prior quarter.
ADM's adjusted operating profit from the Ag Services and Oilseeds segment rose to $1.2 billion from $1.01 billion a year earlier.
The strong result eclipsed weaker earnings from ADM's Nutrition segment and its Carbohydrate Solutions unit, which includes its ethanol business. Ample supplies have weighed on margins for producing the biofuel, ADM said.
ADM's adjusted net earnings stood at $2.09 per share for the three months ended March 31, topping the $1.78 expected by analysts, Refinitiv Eikon data showed.