Archer Daniels Midland Company (ADM) announced a 41.3% drop in second-quarter adjusted profit on Thursday after severe U.S. weather this spring and the U.S.-China trade war issues continue to take their toll on the supply chain. ADM was also quick to point out the ripple effects to come from the African swine fever (ASF) outbreak that has already killed millions of pigs in China.
“We took aggressive action in the face of challenging external conditions, and we are confident that our work over the first half of the year will help deliver a stronger back half,” said Chairman and CEO Juan Luciano in a company release.
Although the timing is uncertain, Luciano said he believes food and agricultural trade will resume between the U.S. and China and will help bolster margins in the U.S. grain export and ethanol industries.
"We are also seeing early signs of how African swine fever might impact global animal protein markets and eventually support incremental soybean meal demand in key meat-producing regions outside of China," Luciano said.
ADM’s performance this year represents a sharp reversal of fortunes from last year, when ADM's profits surged after a drought in Argentina and the U.S.-China trade dispute boosted its trading and oilseed processing businesses, Reuters reported.
All but one of ADM's business units reported a lower profit for the second quarter ended June 30. Animal Nutrition results were higher than the second quarter of 2018, driven largely by accretion from the Neovia acquisition, the company reported.
ADM’s adjusted net earnings for the quarter fell to $340 million, or 60 cents per share, from $579 million, or $1.02 per share, a year earlier. Revenue was at $16.3 billion, dropping 4.5%.
The biggest drop was in the company's origination business. Despite solid execution, ADM said second quarter 2019 volumes and margins in North America were impacted by continued high water conditions on U.S. rivers, which limited river asset utilization, and the competitiveness of U.S. crops, particularly corn, in export markets.
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