Archer Daniels Midland Co.

Although the very strong growth rates in ag services are not likely to repeat at the same magnitude in 2021, several factors support a favorable outlook for ADM's earnings over the next two years. The ag services and oilseeds business should continue to benefit from strong global demand for oilseeds as demand for animal feed remains strong, as China continues to rebuild depleted domestic grain and oilseed stocks and geographies such as Europe look to produce more biofuels for their economies. In addition, recently completed manufacturing projects and favorable secular trends for the company's human and animal nutrition businesses continue to support double-digit percent growth rates in its nutrition segment. This should offset a more subdued outlook for ADM's carbohydrates

...Although Archer Daniels Midland Co. (ADM) faces a difficult comparison to a strong operating performance in 2020, the underlying fundamentals for most of its business segments are favorable. ADM's adjusted EBITDA increased more than 10% year over year, driven by strong Latin America origination margins and a rebound in U.S. soybean exports to China. This led to 65% year-over-year operating profit growth in its ag services business. The company also generated double-digit percent operating profit growth in the nutrition segment, for which animal nutrition's amino acids business did well in Asia-Pacific and human nutrition continued benefiting from growing demand for plant-based and wellness products that use probiotics. Although the very strong growth rates in ag services are not likely to repeat at the same magnitude in 2021, several factors support a favorable outlook for ADM's earnings over the next two years. The ag services and oilseeds business should continue to benefit from strong...

Full Report