Sector News

ADM restructures business groups as grain margins falter

March 20, 2018
Food & Drink

Archer Daniels Midland Co said on Monday that it would restructure its business units, as the U.S. agricultural merchant seeks ways to remain competitive in the face of persistent tight margins in the global grains sector.

ADM and rival grain merchants such as Bunge Ltd and Cargill Inc have struggled as a global oversupply of food commodities has made it tough to turn a profit on their core business: buying, processing, and selling corn, soy and wheat.

The companies have been trying to diversify into higher-margin sectors, such as food ingredients and aquaculture feed, to compensate for the poor returns on their traditional grain handling businesses.

Chicago-based ADM said it was shifting its business segments into four new units – carbohydrate solutions, nutrition, oilseeds and origination – to differentiate its offerings to customers.

Among other things, the shift more clearly separates the company’s wheat milling and ingredients businesses from its grain-trading business.

ADM, which dates back to 1902, has in recent years also lost key traders and exited energy trading. It named a new chief growth officer last year.

Chief Executive Juan Luciano said in a statement that ADM has been trying to become a “more agile and efficient company,” and the reorganization will help continue that effort.

Its rivals, too, have been shaking up operations in a bid to bolster financial results.

In November, Bunge said it was reducing the number of its operating units to three from five.

Cargill overhauled its management team in 2015.

For ADM, some of these changes also date back to 2015, when it created a new business unit, Wild Flavors and Specialty Ingredients, after it bought natural flavorings company Wild for about $3 billion.

More recently, ADM has broadened its international operations in the face of the global grain glut, buying a stake in corn mills in Russia and entering a soybean joint venture with Cargill in Egypt.

ADM’s pre-restructure units are agricultural services, corn processing, oilseeds processing, and Wild Flavors and specialty ingredients.

After the restructure, most of its agricultural services operations, which include grain trading, will be housed in an origination unit that will be led by Stefano Rettore. Rettore left rival CHS Inc last year to become ADM’s chief risk officer.

ADM’s wheat milling business, which has been in the agricultural services unit, and its corn processing division will become part of a new carbohydrates solutions segment. Chris Cuddy, who was president of corn processing, will lead the unit.

Wild Flavors will be housed in a new nutrition unit, which will be led by Vince Macciocchi, who was formerly president of the Wild division. The oilseeds segment will remain unchanged.

ADM said its new business segments will be reflected in its financial results beginning with the first quarter of 2018, which are due on May 1.

By PJ Huffstutter and Tom Polansek

Source: Reuters

comments closed

Related News

November 27, 2022

Cargill to appoint Brian Sikes as president and CEO

Food & Drink

Cargill will appoint Brian Sikes as its president and chief executive officer on 1 January 2023. The soon-to-be CEO, currently holding the chief operating officer title, has worked at Cargill for 31 years. Dave MacLennan, who has served as Cargill’s CEO since 2013, will assume the role of executive chair of the company’s board of directors.

November 27, 2022

Wellness, self-expression drive the latest trends in colors and flavors

Food & Drink

Comforting colors, feel-good flavors, and unique food and beverage experiences will resonate most with consumers in the new year, according to ADM’s latest Flavor and Color Outlook. ADM anticipates that 2023 will be the year of self-expression, and the company identified four trends that are sure to stand out.

November 27, 2022

Nespresso unveils home-compostable coffee capsules in partnership with Huhtamaki

Food & Drink

Nestlé’s Nespresso brand will pilot home-compostable coffee capsules on the Nespresso Original system in France and Switzerland from spring 2023 before further launches in several other European countries within a year. The paper-based capsules are touted as a breakthrough in packaging technology after three years of R&D.