UPDATE 2-ADM results beat as nutrition business helps weather trade-war impact

(Reuters) – Grain trader Archer Daniels Midland Co’s (ADM.N) quarterly results beat Wall Street estimates on Thursday, as higher returns from nutrition business cushioned the impact of a deep slump in commodity prices.

FILE PHOTO: The world’s largest corn mill of global grain company Archer Daniels Midland is pictured in Decatur, Illinois, U.S., March 16, 2015. REUTERS/Karl Plume/File Photo

The Chicago-based company and its rivals have been reeling under weaker prices as a result of a prolonged U.S.-China trade war and a supply glut for soy and corn.

Adjusted operating profit at its nutrition business jumped 76% as the company steadily pushes for growth by investing in specialty ingredients such as pea protein and other plant-based, protein-rich ingredients.

Global grain traders have been trying to weather the impact of the trade war that has eroded Chinese demand for North American crops, particularly U.S. soybeans, by restructuring businesses to cut costs.

Meanwhile, an outbreak of the African swine fever in China has reduced the need for soy imports used for livestock feed, squeezing margins and sapping profits of the companies. China is the world’s biggest hog producer and soybean importer.

ADM is one of the so-called “ABCD” quartet of grain traders, alongside Louis Dreyfus Co [AKIRAU.UL], Bunge Ltd (BG.N) and Cargill Inc [CARG.UL].

Its revenue rose 5.8% to $16.72 billion in the quarter ended Sept. 30, supported in part by higher sales across segments.

The company said improved merchandising results in North America by its agricultural services and oilseeds unit helped “offset a continued challenging volume and margin environment for U.S. exports.”

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The company is still well-positioned for improved results going into the next year, ADM Chief Executive Officer Juan Luciano said in a statement.

However, adjusted earnings from its carbohydrate solutions segment fell 36.8% to $182 million due to lower margin at its ethanol business. Excluding items, ADM earned 77 cents per share, beating average analyst estimate of 69 cents, according to IBES Refinitiv data.

Smaller rival Bunge too beat profit estimates on Wednesday, but warned of a drop in annual profits due to mounting challenges to its grain trading and processing business.

Reporting by Arundhati Sarkar in Bengaluru and P.J. Huffstutter in Chicago; Editing by Vinay Dwivedi and Arun Koyyur



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