ADM posts record Q4 profit on rising biofuel demand, projects strong 2022

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The world's largest corn mill of global grain company Archer Daniels Midland is pictured in Decatur, Illinois, U.S., March 16, 2015. REUTERS/Karl Plume/File Photo

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Jan 25 (Reuters) - Global grain trader Archer-Daniels-Midland Co (ADM.N) reported a record fourth-quarter profit on Tuesday and said it would continue to cash in on strong demand for crops and biofuel in 2022.

Chicago-based ADM's earnings jumped nearly 14% in the quarter as rising biofuel demand and strong ethanol margins doubled operating profit at its carbohydrate solutions division.

High energy and grain costs, however, clipped earnings at the corn-processing unit, as well as its core ag services and oilseeds segment, where operating profit fell from the same quarter a year earlier.

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Shares were down about 2.2% in midmorning trading.

ADM's results offered a look into how the world's biggest grain traders are weathering shifts in food and fuel demand triggered by the pandemic and soaring inflation.

ADM and rival agribusinesses have benefited from rising demand for food and renewable fuel as economies reopen.

"As we look forward in 2022, we see a positive demand environment across our portfolio," said CEO Juan Luciano.

U.S. demand for ethanol is likely to return to pre-COVID levels this year and ADM's dry mills that churn out the corn-based biofuel have resumed production after pandemic-related closures in 2020, company executives said.

Surging prices for the grain and oilseeds ADM buys, sells, processes and ships around the globe have presented a challenge.

Adverse crop weather in South America and the crisis between Russia and Ukraine, a major global grain supplier, may keep crop prices elevated "well into probably 2023," Luciano said.

ADM's net earnings rose to $782 million, or $1.38 per share, in the quarter ended Dec. 31, from $687 million, or $1.22 per share, a year earlier.

Excluding one-time items, earnings of $1.50 a share, a record for the quarter, topped the consensus analyst estimate of $1.37, according to Refinitiv Eikon data.

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Reporting by Karl Plume in Chicago; Additional re porting by Ruhi Soni in Bengaluru; Editing by David Clarke and Bernadette Baum

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Thomson Reuters

Chicago-based senior commodities correspondent covering agricultural markets, large agribusinesses and the food supply chain and specializing in global trade, farming technology and climate change issues impacting the industry.