ADM posts lower Q2 2023 financial results

Company raises earnings expectations for 2023 due to strong first half.

Krissa Welshans, Livestock Editor

July 26, 2023

4 Min Read
ADM posts lower Q2 2023 financial results
ADM headquarters in Decatur, IL. Image courtesy of ADM

ADM reported this week financial results for the quarter ended June 30, 2023, posting adjusted earnings per share of $1.89, down from $2.15 in the same period last year. Net income was $927 million in Q2, down from $1.24 billion in Q2 2022. Despite lower year-over-year results, the numbers exceeded analyst estimates.

“Through our second quarter results, ADM has once again shown that the diversity of our business portfolio and our integrated value chain have enabled our team to consistently deliver excellent results, even in very dynamic market conditions,” said ADM Chairman and CEO Juan Luciano. “Our pursuit of trend-based innovation and our relentless focus on driving efficiencies across the enterprise continue to create value for our customers and shareholders.”

Luciano said the company Ag Services & Oilseeds division leveraged recent investments in infrastructure and operations to achieve record origination volumes in Brazil, while Carbohydrate Solutions delivered excellent results across global starches and sweeteners.

Meanwhile, Nutrition achieved strong results in Flavors and drove continued expansion of the customer base and opportunity pipeline, while actively addressing softer demand within other parts of the segment.

The company also continued to make progress advancing strategic initiatives connected to decarbonization, which Luciano said is helping build additional earnings power and growth for ADM.

“Based on our strong first-half results, increased confidence in second-half performance, and our team’s demonstrated ability to execute, we are raising our earnings expectations for full-year 2023.”

Ag Services & Oilseeds results were strong, but slightly lower than the second quarter of 2022.

  • Ag Services results were in-line with the strong second quarter of 2022. South American origination results were higher year-over-year, as the team delivered record volumes and higher margins on strong export demand, leveraging our strategic investments in port capacity to capitalize on the record Brazilian soybean crop. Results for North America origination were slightly lower year-over-year, driven by lower export volumes due to large South America supplies. Our execution in Destination Marketing as well as effective risk management continued to deliver strong Global Trade results, though lower than last year’s record quarter.

  • Crushing results were much lower than the record result from the second quarter last year. Global soy crush margins remained strong but were lower year-over-year in all regions due to softer demand for both meal and oil and a tight US soybean carryout. This was partially offset by strong softseed margins and higher volumes, supported by a strong Canadian canola crop and use of our flex capacity in EMEA. Additionally, there were approximately $195 million of negative mark-to-market timing effects in the current quarter that are expected to reverse as contracts execute in future periods.

  • Refined Products and Other results were significantly higher than the prior-year period, achieving a record second quarter. North America results were higher, driven by strong food oil demand and improved biodiesel volumes. In EMEA, strong export demand for biodiesel and domestic food oil demand supported stronger margins. Additionally, there were approximately $90 million of positive mark-to-market timing effects in the current quarter that are expected to reverse as contracts execute in future periods.

  • Equity earnings from Wilmar were lower versus the second quarter of 2022.

Carbohydrate Solutions delivered strong results in Q2, but lower than the record second quarter of last year.

  • The Starches and Sweeteners subsegment, including ethanol production from our wet mills, capitalized on a solid demand environment during the quarter. North America starches and sweeteners delivered volumes and margins similar to the prior year, and ethanol margins were solid as industry stocks moderated, though lower relative to the prior year. Q2 results were negatively impacted due to unplanned downtime at one of our corn germ plants. In EMEA, the team effectively managed margins to deliver improved results. The global wheat milling business posted higher margins, supported by steady customer demand.

  • Vantage Corn Processors results were lower due to lower year-over-year ethanol margins. The prior year period also included a one-time $50 million benefit from the USDA Biofuel Producer Recovery Program.

Nutrition results were significantly lower year-over-year versus the record prior-year quarter.

  • Human Nutrition results were in-line with the second quarter of 2022, as the team effectively managed a challenging demand environment. Flavors results were significantly higher than the prior year due to improved mix and pricing in EMEA and improving demand in North America. Specialty Ingredients results were lower year-over-year due to softer demand for plant-based proteins, particularly in the meat alternatives category in North America and Europe, partially offset by strong performance in texturants. Health & Wellness results were similar versus the prior year as lower demand for fibers offset lower SG&A costs.

  • Animal Nutrition results were much lower compared to the same quarter last year due to significantly lower contribution from amino acids, pockets of softer global feed demand affecting volumes, and continued demand fulfillment challenges and inventory losses in Pet Solutions.

Other Business results were significantly higher than the prior-year quarter due to improved ADM Investor Services earnings on higher net interest income. Captive insurance results improved on premiums from new programs partially offset by increased claim settlements.



About the Author(s)

Krissa Welshans

Livestock Editor

Krissa Welshans grew up on a crop farm and cow-calf operation in Marlette, Michigan. Welshans earned a bachelor’s degree in animal science from Michigan State University and master’s degree in public policy from New England College. She and her husband Brock run a show cattle operation in Henrietta, Texas, where they reside with their son, Wynn.

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