Global grains merchant Archer-Daniels-Midland Co beat Wall Street expectations for third-quarter profit on Tuesday on good ethanol and sweetener margins and strong Brazilian crop exports, although results were lower year on year.
Chicago-based ADM raised its full-year earnings outlook to "in excess of $7 a share" from "around $7" after a strong first three quarters of the year and a favorable market environment.
ADM, whose shares were down about 1.6% at $71.23 in midmorning trading, has capitalized on good demand for food, animal feed and biofuel, while record-large corn and soybean harvests in Brazil have offset reduced supplies from drought-hit Argentina and war-torn Ukraine.
But volatile markets have blunted demand at times, creating headwinds for ADM, which makes money by processing, trading and shipping crops around the world.
"The global market is increasingly dynamic, with factors that create both opportunities and challenges for ADM to address," said CEO Juan Luciano, citing "geopolitical tensions, inflationary pressures and the constantly adjusting balances of commodity supply and demand."
The company posted an adjusted profit of $1.63 per share for the three months ended Sept. 30, above analysts' average estimate of $1.52 per share but short of the $1.86 per share in last year's third quarter, according to LSEG data.
ADM's Ag Services and Oilseeds unit, its largest in terms of revenue, posted a 21% drop in operating profit as a surge in South American crop exports dented demand for supplies from the United States, home to the bulk of the company's operations. Lower year-on-year oilseed crushing results also dragged on profit.
Robust ethanol, sweetener and starches margins propelled ADM's Carbohydrate Solutions segment, which reported a 49% jump in operating profit.
ADM's Nutrition segment posted lower results on weak demand for meat protein alternatives and unplanned downtime at a large soy processing facility following an accident in September.