Fueled by rising demand for corn as a means of alternative energy, Archer Daniels Midland (NYSE:ADM) reported on Tuesday a stronger-than-expected 29% increase in second-quarter profit, and expressed optimism for the biofuel industry, sending its shares to a 52-week high.
The Decatur, Ill-based company posted net earnings of $732 million, or $1.14 a share, compared with $567 million, or 88 cents a share, in the same quarter last year, trumping average analyst estimates polled by Thomson Reuters of 79 cents.
Revenue for the processor and merchandiser of agricultural commodities and products was $20.8 billion, up from $15.9 billion a year ago, beating the Street’s view of $17.42 billion.
“The ADM team delivered outstanding performance across the board, resulting in record operating profit,” said Patricia Woertz, the company’s chief executive. “Amid strong demand and regional dislocations, we used our vast global network to deliver for our customers and shareholders.”
Earnings were helped by a $109 million improvement in its corn processing segment, driven by stronger demand for ethanol production and export sweetener, and a $276 million drop in agricultural services, partially offset by a $27 million decline in oilseeds processing.
Looking ahead, ADM said global demand for crops and processed products remains strong, as does demand for protein meal, which is being led by Asia.
U.S. corn-based ethanol remains the most competitive ethanol in the global market, according to AMD, and one-year extensions of the blenders’ credits and the U.S. EPA’s recent decisions on enhanced ethanol blending support biofuels.