LDC — commonly known as Dreyfus and part of the ABCD quartet of global crop merchants alongside ADM, Bunge Global and Cargill — said first-half volumes were up 4.4 per cent on the year, contributing to a 2.3 per cent rise in sales to US$26.2 billion.

Core EBITDA profit, however, fell 6.6 per cent to $987 million while net profit dropped 14.5 per cent to $418 million.

The group’s coffee division stood out by posting higher operating profit, supported by increased volumes and prices. But most other units, including grains and oilseeds, recorded lower results due to weaker prices, trade tensions and an uncertain economic climate, LDC said in an interim financial report.

The company increased capital expenditure in the first half to US$521 million from US$299 million a year earlier, notably to expand oilseed processing, including in North America.

LDC is set to expand its global oilseed capacity further after acquiring assets in Hungary and Poland from Bunge. It said the initial price of the acquisition was US$483 million.

Higher first-half spending contributed to a rise in LDC’s adjusted net debt to $2.4 billion from $1 billion at the end of 2024, it said.

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Before news of the accounting issues broke and sent ADM shares tumbling 24 per cent on Monday, the biggest fall since 1929, according to the Center for Research in Security Prices, the company had been forecasting the Nutrition unit it has been expanding for much of the past decade would return to profit growth in 2024.

The recovery in the business segment that generated about 11 per cent of profit for ADM in 2022 would have helped cushion the blow from thinning margins in soybean crushing and ethanol, and from lower crop prices as global supplies of corn and soy rise, analysts said.

“It is now uncertain whether Nutrition operating profits will return to (year-over-year) growth in 2024,” said Arun Sundaram, senior equity analyst at CFRA Research.

“We expect the investigation and uncertain outlook to cast a shadow over ADM’s shares, as the Nutrition segment was once the fastest growing and most profitable segment,” he said.

CFRA cut its 12-month price target for ADM to $61 a share from $76 previously, one of several analysts that downgraded ADM share targets Monday.

Shares were up 1.6 per cent on Tuesday after sinking to a nearly three-year low the previous day.

ADM and its crop processing and trading rivals cashed in on historically wide soy crushing margins over the past two years due to strong demand for vegetable oil to make biofuel, and reduced soy product supplies from drought-hit Argentina. Those margins are now thinning due to expanded U.S. processing capacity and a projected crop rebound in Argentina.

Meanwhile, margins for producing ethanol biofuel, a cornerstone of ADM’s portfolio, have narrowed and a global grain glut has curbed crop exports from the United States, home to the bulk of ADM’s operations.

Rivals including Bunge BG.N have more of an export base in Argentina and Brazil.

Lowered outlook

ADM on Sunday put its CFO Vikram Luthar on administrative leave and postponed the upcoming release of fourth-quarter results and its annual 10-K filing with the U.S. Securities and Exchange Commission (SEC).

The investigation started in response to a voluntary document request by the SEC. ADM said it was cooperating with the regulator. An SEC spokesperson declined to comment about the voluntary document request and if the agency is investigating ADM.

The company also cut its adjusted earnings forecast to “above $6.90” per share for 2023 from an “excess of $7 a share” view earlier, and withdrew all of its forward-looking outlooks for Nutrition.

ADM has invested billions of dollars over the past decade in Nutrition, the smallest yet fastest growing of its three main business units, starting with its $3 billion acquisition of WILD Flavors in 2014. In that time, annual adjusted earnings per share swelled from $2 to $3 a share to a record $7.85 in 2022.

ADM executives frequently tout the segment as the future of the company, aiming to capitalize on healthier eating trends and rising consumer demand for natural ingredients and flavorings.

The unit also provided more earnings stability as company results were tied less directly to the highly cyclical commodities market.

It was unclear if two recent Nutrition unit acquisitions due to close early this year would be impacted. ADM announced the purchase of Revela Foods, a Wisconsin-based developer and manufacturer of dairy flavor ingredients, and UK-based flavor and ingredient firm FDL late last year. Analysts also struggled to gauge future returns for the Nutrition segment.

“If we can’t rely on the financial statements, it’s hard to judge the return that they are getting for all these acquisitions if there is going to be a massive restate of profits that affects multiple years,” said Seth Goldstein, strategist with Morningstar.

–Additional reporting for Reuters by David Gaffen and Tom Polansek.

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The strong result was the latest for a global agricultural commodities trader after rivals ADM and Bunge reported solid earnings last month amid high farm products prices and robust global demand. Both rival companies also projected strong earnings through the remainder of 2022.

Privately-held Cargill halted public reporting of most of its quarterly and annual financial data in 2020 but reports its full-year sales in an annual report.

Russia’s invasion of major corn and wheat exporter Ukraine has driven up demand for crops that supply-chain middlemen such as Cargill ship around the world. Shipments are restarting, but volumes so far have been minimal.

Demand for feed, food and biofuels has also surged as economies have ramped up after pandemic-related disruptions.

Cargill is one of the largest U.S. beef processors and last month closed a deal to buy No. 3 chicken producer Sanderson Farms with Continental Grain in a deal worth some US$4.53 billion.

— Reporting for Reuters by Karl Plume in Chicago.

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The company said medical distribution from the Aurora Polaris facility that is being shut down will move to an adjacent factory, Aurora Sky, while manufacturing will move to its Aurora River factory at Bradford, Ont., north of Toronto.

“We aspire to be a leaner, more agile organization that keeps pace with our competition and is on a path to profitability,” a spokesperson for the company said in an email statement.

The company, however, did not disclose the number of employees that would be impacted by the move.

On Monday, the Edmonton-based company also delayed the announcement of its fourth-quarter earnings.

Aurora had announced staff reductions and plans to shut five facilities in June last year, hit by the pandemic’s impact on the cash-strapped cannabis industry.

Canada legalized recreational cannabis in October 2018, but profits have remained elusive for most marijuana companies due to fewer-than-expected retail stores, cheaper rates on the black market and slow overseas growth.

— Reporting for Reuters by Niket Nishant and Shariq Khan in Bangalore.

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The overall value of the deal was not disclosed but LDC said in a statement that a portion of the proceeds had been invested in the full repayment of a US$1.051 billion loan that LDC had granted to its parent company.

The stake sale to ADQ was initially announced last November.

That ended a long hunt for an investor by controlling shareholder and chairwoman Margarita Louis-Dreyfus, who had built up debt buying out other family members during a period of lean profits for the commodity merchant.

LDC, known as Dreyfus, is the “D” of the “ABCD” quartet of renowned global agricultural commodity firms alongside ADM, Bunge and Cargill.

“This partnership with ADQ reinforces LDC’s position and financial strength to accelerate strategic investments (…) including in new areas such as plant-based proteins, as well as in projects to move further downstream in several of our existing business lines,” CEO Michael Gelchie said in the statement.

The financial pressure on LDC in recent years was also linked to Brazilian sugar firm Biosev, previously owned by LDC’s parent.

The US$1 billion loan from LDC to its parent, originally due in 2023, was part of a bailout for Biosev.

That burden has also eased after LDC’s holding firm agreed this year to sell Biosev to Brazilian energy company Raizen .

A surge in commodity prices and strong grain demand from China have also boosted earnings for merchants during the coronavirus pandemic, helping LDC’s profit recover last year.

For state-owned ADQ, the investment in LDC extends a foray into food commodities that are crucial to import-reliant Gulf states.

The deal with LDC outlines a long-term supply agreement to sell agricultural commodities to the United Arab Emirates.

— Reporting for Reuters by Gus Trompiz in Paris.

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The world’s largest farm equipment manufacturer now expects net income in fiscal 2021 to be between $5.7 billion and $5.9 billion, up from a range of $5.3 billion and $5.7 billion forecast in May (all figures US$). This is the third upgrade in the company’s earnings estimate in seven months.

Higher farm income following a run-up in commodity prices and the need to replace aging fleets are driving up demand for new tractors and combines.

“Looking ahead, we expect demand for farm and construction equipment to continue benefiting from favourable fundamentals,” Deere CEO John May said.

The demand is booming at a time when dealer inventories are at a record low and the pandemic has disrupted the supply chain, extending the time equipment makers need to produce new orders. Big tractor makers including Deere are booking orders for delivery in 2022.

With supplies lagging demand, farm machinery companies are able to push through price increases to offset their soaring input costs.

For example, Deere’s revised earnings estimate assumes an eight per cent gain in prices for large farm machines. That compares with a six per cent price increase estimated in February.

The company also revised up the outlook for industry sales of agricultural equipment in Europe and Asia, though it left estimates for sales in the U.S., Canada and South America unchanged.

Earnings for the third quarter came in at $5.32 per share, up from $2.57 per share ago. Analysts surveyed by Refinitiv, on average, expected the company to post a profit of $4.55 per share.

Equipment sales rose 32 per cent year-on-year to about $10.4 billion.

— Reporting for Reuters by Rajesh Kumar Singh in Chicago and Sanjana Shivdas in Bangalore.

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As crop prices rise, farmers have greater incentive to use fertilizer and maximize yields, boosting potash demand and spurring a surge in global sales of potash fertilizer.

Nutrien expects higher output to boost core earnings from its potash business in the second half of 2021.

The Saskatoon-based company said in May it expects potash sales in the range of 12.5 million tonnes to 13 million tonnes for 2021. Last month, it also raised full-year forecast for adjusted net earnings per share to between $2.55 and $3.25 from $2.05 to $2.75 forecast earlier (all figures US$).

Domestic and offshore potash sales volumes are currently fully committed through September, based on original production profile for 2021, Nutrien said in a statement.

The company said it will be hiring more workers and “adapting its resources” to help lift production across most of its mines — particularly at its Vanscoy facility, about 35 km southwest of Saskatoon.

Nutrien was also recently reported to be in discussions with international mining firm BHP about a partnership on the latter company’s major potash development at Jansen, Sask., about 60 km southeast of Humboldt.

— Reporting for Reuters by Rithika Krishna in Bangalore. Includes files from Glacier FarmMedia Network staff.

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Still, revenue missed analysts’ expectations and net earnings attributable to the company were 44 per cent lower than a year earlier. Shares were down nearly three per cent in extended trade, after setting a two-year high last Friday.

ADM said it benefited in the third quarter as North American demand for starches grew from a year ago and earlier in 2020, though food-service demand has suffered.

The company and rival grain traders like Bunge have faced headwinds from the COVID-19 pandemic as shuttered restaurants and reduced travel disrupted demand for food and fuel. But the merchants have weathered the crisis better than other industries as countries around the world are stocking up on wheat and other staples to ensure supplies.

“Reduced food service demand affected sweetener and flour volumes, though retail demand for flour remained solid,” ADM said.

Operating profit in ADM’s corn and wheat milling business, a unit known as carbohydrate solutions that includes starches and sweeteners, rose by 35 per cent from a year ago, to $246 million (all figures US$).

Profit in the nutrition unit jumped 24.6 per cent to $147 million, while profits in ag services and oilseeds — ADM’s biggest segment — rose 4.6 per cent to $436 million.

Excluding one-time items, the company earned 89 cents per share, while analysts on average had estimated 71 cents, according to IBES data from Refinitiv.

Net earnings attributable to ADM fell to $225 million, or 40 cents per share, including a 53-cent per share charge related to early debt retirement. That was down from $407 million, or 72 cents per share, a year earlier.

Revenue fell to $15.13 billion from $16.73 billion, below analysts’ estimates.

ADM said selling, general, and administrative expenses rose to $636 million from $578 million last year.

— Reporting for Reuters by Arundhati Sarkar in Bangalore and Tom Polansek in Chicago.

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Bunge shares rose almost seven per cent to their highest level in more than a year.

The company raised full-year profit guidance for a second straight quarter, projecting 2020 earnings of $6.25 to $6.75 per share (all figures US$). The company cited better-than-anticipated agribusiness results and a more favourable outlook for its edible oils unit despite the ongoing coronavirus pandemic.

“In our view, the team’s execution was nearly flawless this quarter,” CEO Greg Heckman said, adding that guidance was lifted “based on Q3 results and improving market trends.”

Grain traders such as Bunge and rivals Archer Daniels Midland, Cargill and Louis Dreyfus, known as the ABCDs of grain, have faced headwinds from the pandemic as shuttered restaurants and reduced travel disrupted demand for food and fuel. Infection rates are rising again globally, triggering fresh lockdowns and other restrictions.

But they have weathered the crisis better than other industries, and Bunge — whose Canadian businesses include oilseed crushing and processing and a joint stake in Prairie grain handler G3 — said its facilities continued to operate at or near normal levels.

Bunge agribusiness earnings more than doubled to $467 million on robust margins in South America, Europe and Asia and active grain sales by South American farmers. Edible oils performed better than expected, although results were down year-on-year.

Net attributable income to Bunge was $262 million, or $1.84 per share, for the third-quarter ended Sept. 30, compared with a loss of $1.49 billion, or $10.57 per share, a year earlier when Bunge took charges totaling about $1.7 billion.

On an adjusted basis, Bunge posted a profit of $2.47 per share, up from $1.28 per share a year earlier.

Net sales fell 1.6 per cent to $10.16 billion, but topped analysts’ estimates of $9.92 billion, according to Refinitiv IBES.

— Reporting for Reuters by Karl Plume in Chicago and Arunima Kumar in Bangalore.

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Good weather and higher planted area shifted corn volumes in North America to the first quarter, while the pesticides business was pressured by a strong performance last year when Latin America’s growing season started earlier, the company said.

Corteva, which had suspended its 2020 forecast in May due to uncertainty from the COVID-19 crisis, said it now expects earnings per share between $1.25 and $1.45 for the year, below analysts’ estimates of $1.40 at its midpoint (all figures US$).

It estimated sales to rise one to two per cent, which translates to a range of between $13.98 billion and $14.12 billion, also lower than analysts’ estimates of $14.2 billion.

Wednesday’s outlook was also slightly below Corteva’s original estimates for earnings between $1.45 and $1.55 per share on sales of about $14.5 billion, reflecting a weaker Brazilian real and lower corn demand.

Corteva said demand and prices for corn have not yet seen a complete rebound. A third of all U.S. corn produced is used to make ethanol, which has taken a hit as pandemic-driven travel restrictions hurt demand for gasoline into which the biofuel is blended.

The Wilmington, Delaware-based company earned $1.26 per share for the three months ended June 30, beating analysts’ estimates of $1.24, in part due to cost cuts.

The company, spun off from chemical conglomerate DowDuPont, said net sales fell 6.6 per cent to $5.19 billion, missing estimates of $5.47 billion, according to Refinitiv IBES data.

— Reporting for Reuters by Arathy S Nair in Bangalore.

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