WILD Flavors and Specialty Ingredients
In the 1Q16 earnings call, Archer Daniels Midland’s management mentioned that the WILD Flavors and Specialty Ingredients’ results were in line with the expectations. WILD Flavors and Specialty Ingredients—especially specialty proteins, oils, and natural health and nutrition products—had a good performance in the quarter. The segment earned $70 million in operating profit in the quarter.
It included $3 million in operational startup costs for the Tianjin Fibersol facility in China and the Campo Grande specialty protein complex in Brazil. Management mentioned that WILD Flavors and Specialty Ingredients remains on track to achieve its 2016 targets.
Update on Harvest Innovations
In the first quarter, Archer Daniels Midland advanced with its strategic plan and acquired a controlling stake in Harvest Innovations. This initiative was taken to enhance Archer Daniels Midland’s plant protein and gluten-free ingredients portfolio. It’s an addition to Archer Daniels Midland’s WILD Flavors and Specialty Ingredients business unit. Harvest Innovations is an industry leader in minimally processed, expeller-pressed soy proteins, oils, and gluten-free ingredients.
Ongoing portfolio management
As part of this strategy, Archer Daniels Midland sold its Brazilian sugar cane ethanol operations. It achieved almost $50 million in run rate savings in the first quarter related to this sale. Also, it remains on track to reach the $275 million target by the end of 2016.
The company also announced the purchase of a corn wet mill in Morocco. This mill is expected to expand the company’s global sweetener footprint. Archer Daniels Midland opened its new, state-of-the-art flavor creation, application, and customer innovation center in Cranbury, New Jersey. It expects its Campo Grande soy protein complex in Brazil to start ramping up production during 2H16.
Archer Daniels Midland’s industry competitors include Hormel Foods (HRL), WhiteWave Foods (WWAV), and Kellogg (K). They saw operating profit of $360 million and $92 million. Kellogg reported a loss of $39 million, respectively, in its last reported quarters. The PowerShares High Yield Equity Divide (PEY) and the Consumer Staples Select Sector SPDR Fund (XLP) invest 1.6% and 1.1% of their respective portfolios in Kellogg.