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Archer Daniels (ADM) to Build Crushing Facility to Meet Demand

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Archer Daniels Midland Company ADM revealed plans to build a crushing facility in Spiritwood, ND, in a bid to meet the growing demand for renewable products. This will be the first-ever soybean crushing plant and refinery in the North Dakota state and will satisfy the needs of food, feed, industrial and biofuel customers, as well as producers of renewable diesel.

Further, the $350-million facility will come with state-of-the-art automation technology and the capacity to process 150,000 bushels of soybeans per day. The construction of this facility is likely to be concluded by the 2023 harvest season. With the help of Archer Daniel’s global logistics network, this facility will be able to gain access to both domestic and global markets for soybean oil and meal. Apart from renewable diesel production, this project is expected to be accretive to farmers as it will expand the market for soybean.

In another development, the company announced the expansion of refining and storage capacity of its existing facility in Quincy, IL. In doing so, it will invest $25 million. This move, which is projected to be completed by the first quarter of 2022, will help fully align the facility’s refining capabilities with its crush capacity.

Notably, the company has been witnessing a solid performance in the crushing business, driven by strong margins in soybean and softseed crushing on the back of healthy demand for vegetable oil and tight soybean stocks. This, in turn, aided the Ag Services & Oilseeds segment, which improved 6.3% year over year to $15,007 million during first-quarter 2021.

What Else Should You Know?

Archer Daniels has been gaining from solid demand for majority of its products. This led to strong first-quarter 2021 results, wherein the top and bottom lines advanced year over year. This marked the company’s seventh straight quarter of an earnings surprise with the sixth straight quarter of adjusted operating profit growth. Also, sales across majority of its segments saw growth.

Notably, continued strength in its Nutrition segment bodes well. During first-quarter 2021, revenues in the segment rose 35.5% year over year to $1,563 million. Moreover, the segment’s adjusted operating profit grew 8.5% to $154 million during the first quarter on significant gains in the Human Nutrition unit. The division gained from higher sales across various segments, particularly beverages. Also, a positive product mix in North America and strong margins in the EMEAI region were upsides. Further, Health and Wellness performed well year over year, driven by demand for probiotics and fibers. Going ahead, management is optimistic about the performance of this unit on continued demand for flavors and proteins. Also, animal nutrition products are likely to witness a recovery in the second quarter as restrictions begin to ease in the coming days.

Moreover, management remains on track with the Readiness goals of driving business improvement, standardizing functions and enriching consumers’ experience. The company’s strategic pillars for growth and the aforementioned new initiatives are guided and supported by the Readiness program, focused on accelerating and enhancing competitiveness. Further, under the growth pillar, the company is looking to expand its footprint in fast-growing alternative protein. Also, Archer Daniels is utilizing innovative technologies to develop new products and boost operating capabilities.

In the past three months, shares of this Zacks Rank #2 (Buy) company have gained 21.4%, outperforming the industry’s growth of 14.2%.

Other Stocks to Consider

Albertsons Companies, Inc. ACI has a long-term earnings growth rate of 12% and currently, a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chewy CHWY — another Zacks Rank #2 stock — has a long-term earnings growth rate of 20%.

The Hain Celestial Group HAIN — another Zacks Rank #2 stock — delivered an earnings surprise of 26.4%, on average, over the trailing four quarters.

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