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'International presence, ingredients help ADM to better-than-expected profits

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Archer Daniels Midland stressed its “increasing international presence”, and its growth in higher-margin markets such a flavourings, as the agricultural trading giant unveiled a better-than-expected finish to 2017.


The US-based group - which is reported to be in talks over a takeover of Bunge, one of its major rivals – reported an 85% jump to $788m in earnings for the October-to-December quarter, despite an easing of 2.6% to $16.1bn in revenues.


The improved earnings were, excluding one-time factors, equivalent to $0.82 per share– an increase from the $0.75-per-share result a year before, rather than the decline to $0.70 per share that Wall Street had expected.


“We ended 2017 with a solid fourth quarter,” said Juan Luciano, the ADM chief executive, adding that the group expected “improving results through 2018”.


“Our increasing international presence, and expanding capabilities in areas such as destination marketing, food and beverage innovation, and health and wellness, all help to position ADM for continued growth and value creation.”


US vs global


Indeed, the group’s, albeit relatively small, Wild Flavors and specialty ingredients division provide its best performer in terms of earnings growth, raising operating profits by 47% top $56m in the October-to-December period.


“Wild Flavors delivered double-digit operating profit growth with strong sales across all regions,” ADM said.


Foreign takings, meanwhile, were seen as spurring a 23% rise to $301m in operating profits at the core agricultural services division.


“The lack of competitiveness of US grain exports was offset by solid performance in global trade,” the group said.


US Department of Agriculture data on Monday highlighted the decline in US exports of major crops, showing wheat volumes so far in 2017-18 down 5.0% at 16.62m tonnes, soybean shipments down 14.3% at 34.71m tonnes, and corn exports down 33% at 14.84m tonnes.


Sweeteners vs ethanol


In corn processing, ADM reported a 2.4% rise in operating profits for the quarter to $261m, thanks to a “strong” performance in sweeteners and starches, which achieved “solid earnings growth” in both Europe and North America.


The gains more than made up for a decline in the so-called bioproducts unit from “lower ethanol margins”.


Oilseeds processing was the only one of the group’s main operating divisions to see a drop in profits, of 15.5% to $202m, “due to weak crush margins.


“Origination results in South America were impacted by weak margins.”


ADM shares stood 0.9% higher at $40.95 in early deals in New York, marginally underperforming a 0.6% rise in the Dow Jones industrial average share index.

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