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.

The post Louis Dreyfus posts higher volumes, lower profits in first half appeared first on Alberta Farmer Express.

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.

The post Accounting probe hits ADM as crop glut, lower margins point to tough 2024 appeared first on Alberta Farmer Express.

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.

The post Cargill fiscal 2022 revenue jumps to record US$165 billion appeared first on Alberta Farmer Express.

Those persons who are the most food insecure in Canada live in remote places. The population of Nunavut is 57 per cent food insecure compared to other areas such as Nova Scotia (15.3 per cent food insecure). The most food-secure provinces in Canada are B.C. and Quebec, both of which have policies to use provincially produced food first and have the economic advantage of robust food processing of local products.

Multiple research studies clearly indicate that those persons identifying as Black, Indigenous, Arab or Western Asian and living in Canada are more food insecure than others. As are people who rent compared to folks who own homes.

In investigating food security, access to food came down to reliable income. Researchers have found that the financial point at which folks may become food insecure is when earnings are less than $40,000 per year. Access to fresh and nutritious food is limited with low income and is further compounded when combined with remote location and poor infrastructure such as roads.

Is charity the answer?

To date, there is not one speck of research evidence that food charity addresses food insecurity. Charity addresses the symptoms — which are poor nutrition and hunger — but it does not provide for a consistent ability of a person to provide for or to access food. And although many Canadians rely on food banks, this is not a long-term solution.

In Canada, more than a million of the food insecure are children. This means they are either hungry or do not have adequate access to nutritious foods. Seventeen per cent of these children come from a single-parent home, usually child(ren) and mother. That mom often does not have the same earning power as her male colleagues.

This brings us to the heart of the matter.

Food security hinges on income and reliable income in many homes is dependent on work and wage parity.

Regardless of location, women in Canada make, on average, 68 cents for every $1 — or one-third less the wage — compared to a male doing the exact same job. That 32-cent gap on a 40-hour week at $20/hour equates to $13,312 annually (which is just slightly under the $13,907 it is estimated to cost to feed a family of four in Canada in 2021). Wage parity would provide the access to food needed by these Canadian families.

One of the industries that leads the way in wage difference is agriculture.

In some areas of primary production, such as hand field work, there is evidence that women earn one-half of what males do. The employees on Canadian food-processing lines, with the exception of meat processing, are primarily women. And, they are often working for less — more than $10,000 less than their male colleagues. At the end of the food chain at food service, the waitress serving that great Canadian meal today is earning 17 per cent less than the male server doing the same job.

It is a sad irony that farmers and food processors strive to feed the nation and the world when they are contributing to the difference in wages between genders. Through this practice they are, by default, adding to the food-security crisis.

Change in food security must be led by industry — all industries. As agriculture and agri-food manufacturing employs one in seven persons, it should start here, in the fields and farm sheds, pens and processing floors, offices and boardrooms of our region and nation.

There is no historical, religious or cultural argument that stands against wage parity. All persons were created equal and are recognized as such in the Universal Declaration of Human Rights. Regardless of where a Canadian resides, they should be able to afford to eat. Agriculture and agri-food have a strong and vested interest in seeing wage parity achieved if they are to be part of the food-insecurity solution.

There is a direct link between reliable income and food access. Those persons in families of lone female parents, those who live in remote locations (including farms), those of specific cultures and those households that earn less than $40,000 a year are the most food insecure in Canada today.

If we desire all Canadians in every region, including those without food production, to have access to the nutritious food that we as farmers grow, then we have to provide them with nutritious, affordable, accessible and culturally appropriate options. This we can only achieve with attention to the fact that reliable income provides long-term food-security solutions. Agriculture and agri-food have the opportunity to be the agent for change toward the goal of putting food on the plate of every Canadian.

The post Schoepp: It’s harder for women to put food on table when they’re paid less appeared first on Alberta Farmer Express.

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.

The post Aurora Cannabis to shut one Edmonton plant appeared first on Alberta Farmer Express.

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.

The post Louis Dreyfus completes stake sale to ADQ appeared first on Alberta Farmer Express.

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.

The post Deere lifts 2021 forecast on solid equipment demand appeared first on Alberta Farmer Express.

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.

The post Nutrien to boost potash output on global demand appeared first on Alberta Farmer Express.

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.

The post ADM beats profit estimates but revenue disappoints appeared first on Alberta Farmer Express.

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.

The post Bunge lifts outlook as quarterly profit nearly doubles appeared first on Alberta Farmer Express.