Diving overview:
- archer daniels midland Redirection of $300 million plan The company will expand production of alternative proteins as consumer appetite for plant-based foods wanes, CEO Juan Luciano said on an earnings call Tuesday.
- ADM has “rescoped” its investment projects “to better match the expected low-growth demand environment,” Luciano said. The company expects headwinds to continue next year as market inventories decline as consumer demand slows.
- The nutritional unit Profit of $138 million The third quarter was down 22% from last year’s $177 million. whole, ADM’s profit exceeded analyst expectationsDriven by increased demand for ethanol and growth in certain parts of the nutrition and oilseeds business.
Dive Insight:
There is still interest in the alternative protein category, but fear of rising prices compared to traditional meat. Customer returns and fewer purchases, according to a Corbank report. Beyond cost, persistent negative perceptions around taste, value and versatility remain obstacles for the category.
Last year, ADM announced plans to: Expanding production of alternative proteins It was built in Decatur to meet the strong demand growth at the time. But the slowdown in sales suggests the plant-based meat market may be reaching a tipping point.
To offset the decline in demand, grain giants are pivoting their portfolios to more “resilient categories” such as specialty nutrition and dairy products. But that transition has stalled somewhat after the company’s Decatur explosion. processing complex Eight workers were injured.
“We will work aggressively to resume operational capacity at Decatur East to minimize impacts in 2024,” Luciano said.
Overall, ADM reported third-quarter net income of $821 million, down 20% year-over-year. During the quarter, the grain trader experienced a decline in global soybean crushing margins and a negative shift in export demand to Brazil. Despite these conditions, the company’s financial results exceeded analysts’ expectations due to strong ethanol production and accelerated growth in other business areas.
Strong demand for biofuels, which is expected to continue into next year, boosted profits. ADM’s Vantage Corn Processor division generated a profit of $65 million in the quarter due to higher ethanol margins, a significant increase from last year, when the division reported a loss of $18 million.
ADM stock fell 3%, or $2.40, to close at $69.80 on the New York Stock Exchange on Tuesday.
