(Reuters) - U.S. agricultural merchant Archer Daniels Midland Co beat expectations for quarterly earnings on Wednesday, as it benefited from higher margins in its grain trading and oilseeds business.
The company and its rivals like Bunge Ltd continued to grapple with ripple effects from the coronavirus outbreak, which has rattled global markets and hurt demand for products like ethanol.
But ADM said it bought and exported records volumes of crops in South America during the quarter as farmers were active sellers of their harvests.
“Global trade delivered another strong quarter, as countries looked to secure stable supplies of food amid the pandemic,” ADM said in a statement.
The Chicago-based company said adjusted operating profit in the agriculture services and oilseeds unit, its biggest, rose 14% to $413 million in the second quarter. Its nutrition business was another bright spot, with a 35% jump in adjusted operating profit.
The pandemic has shifted food demand to grocers from restaurants as lockdowns have forced people to eat at home. ADM reported lower demand for edible oils in North America and its Europe, Middle East and Africa region.
Travel restrictions due to the pandemic have hammered biofuel margins.
ADM confirmed that industry ethanol margins were down from a year ago, but said the company benefited from strong demand for industrial ethanol, which can be used to make hand sanitizer, and risk management strategies.
Vantage Corn Processors, an ADM subsidiary that includes dry ethanol mills, reported a profit in a turnaround from a loss a year earlier.
“Prices and margins improved throughout the quarter as lower production, including two idled ADM dry mills, and some recovery in driving miles led to falling industry stocks,” ADM said.
Excluding one-time items, ADM earned 85 cents per share, beating analysts’ average estimate of 51 cents, according to IBES data from Refinitiv.
Bunge also posted better-than-expected second-quarter profit on Wednesday.
Reporting by Arundhati Sarkar in Bengaluru and Tom Polansek in Chicago; Editing by Anil D'Silva and Tom Brown