ADM reports ‘outstanding’ Q4 results

ADM new ADM Logo 2020 FDS .jpg
Company raises dividend on confidence in strategic plan.

ADM this week reported financial results for the fourth quarter and year ended December 31, 2021. The company reported net earnings of $782 million, up from $687 million in Q4 2020. Full-year 2021 net earnings were $2.7 billion, up from $1.8 billion in 2020

“Our record results reflect the continued success of our growth strategy and our culture of innovation and execution, which enabled our global team to successfully navigate through supply chain challenges while capitalizing on favorable demand dynamics to deliver an outstanding year,” said ADM Chairman and CEO Juan Luciano.

He continued, “Just as importantly, we’re advancing our productivity and innovation actions to accelerate earnings growth. We’ve positioned our portfolio to align with the enduring trends of food security, health and well-being, and sustainability.”

Segment results

Ag Services & Oilseeds results were largely in line with the prior year’s extremely strong quarter, the company reported.

Ag Services executed well to deliver strong results, just slightly off the outstanding fourth quarter of 2020, when the U.S. experienced exceptionally high export margins. Global Trade was substantially higher year over year, driven by solid risk management and improved results in global ocean freight.

Crushing executed well in a continued solid demand environment for both soybean meal and vegetable oil. Results were lower year over year, driven by approximately $250 million of net negative timing impacts, versus negative $125 million in the prior-year quarter, as well as lower results in EMEAI versus a very strong Q4 2020. The majority of the negative timing effects are expected to reverse in the first half of 2022.

Refined Products and Other results were substantially higher than the prior-year period, driven by strong volumes and margins in North America for refined oils, and improved margins in North America and EMEAI for biodiesel, more than offsetting weaker South American results due to the reduced biodiesel mandate.

Equity earnings from Wilmar were higher versus the fourth quarter of 2020.

Carbohydrate Solutions results more than doubled year over year.

Starches and Sweeteners, including ethanol production from our wet mills, was lower versus the fourth quarter of 2020, driven by higher input costs, including energy costs in EMEAI, as well as lower wheat milling volumes, partially offset by continued strong ethanol margins.

Vantage Corn Processors results were substantially higher year over year, driven by historically strong industry ethanol margins as a result of strong demand relative to supply, as well as increased sales volumes due to production at the two dry mills that were idle in the previous-year period.

Nutrition had another extremely strong quarter, with revenue growth of 19% and operating profits 26% higher than the prior-year period; full-year operating profits were up 20% versus 2020.

Human Nutrition results were substantially higher year over year, with strength across the business. Flavors continued its growth trajectory, driven primarily by improved product mix in EMEAI and continued strong performance from North America, partially offset by weaker APAC results. In Specialty Ingredients, overall profits were in line with the year-ago period as strong demand for plant-based proteins offset the impact of one-time insurance proceeds in the fourth quarter of 2020. Health & Wellness was higher versus the prior-year quarter, as the business continued to deliver growing profits in bioactives and fermentation.

Animal Nutrition profits were much higher than the fourth quarter of 2020, driven primarily by continued strength in amino acids.

Company ready to capitalize

As the company enters 2022, Luciano said it is well situated “to capitalize on strong crush margins, driven by good demand for meal and for vegetable oil as a feedstock for renewable green diesel; a continuing healthy ethanol market, supported by increased domestic and export demand and better clarity of the regulatory landscape; and our robust Nutrition sales pipeline, as well as the accretion of our recent acquisitions in that business.”

The company’s excellent performance in the fourth quarter and throughout 2021 gives it great momentum going into the new year, he added. “We’re confident in our strategic plan continuing to deliver, which is why we’re pleased to announce an 8% increase in our quarterly dividend. I’m proud of our team, grateful for their efforts, and optimistic for another very strong performance in 2022 as we progress towards our strategic plan’s next earnings milestone of $6.00-$7.00 per share.”

 

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