Archer Daniels (ADM) new facility in China to support the nutrition unit – September 16, 2021
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Archer Daniels Midland Company (SMA – Free Report) opened a new flavor production plant in Pinghu, Zhejiang Province, China under the name of ADM Food Technology (Pinghu) Co., Ltd. The new factory will serve as a flavor supply hub in the Asia-Pacific region.
The state-of-the-art facility is located close to Shanghai, providing a geographic advantage to customers and allowing the company direct access to resources. The installation has automated aroma lines with advanced dosing technology for a smooth and efficient process. It also comes with laboratories for flavor production, taste design and product development. Along with this, there are separate provisions for specific dietary needs such as certified halal and kosher products.
This is the latest investment in the global nutrition sector. Other notable efforts include the acquisition of manufacturers of pet treats and supplements, namely PetDine, Pedigree Ovens, The Pound Bakery and NutraDine (P4); Europe-based non-GMO human nutrition protein solution, namely Sojaprotein; with Golden Farm, a Vietnam-based animal nutrition premix supplier.
As a leading global human and animal nutrition company, it stays on track with investments in organic growth, strategic acquisitions as well as innovation and technology. It has already established itself as the partner of choice for customers who prefer healthy but delicious food and drink.
Archer Daniels’ nutrition unit has long been a major growth driver. In the second quarter of 2021, segment revenue increased 20.6% year-over-year. Segment adjusted operating income increased 27.2% year-on-year, thanks to significant gains in the Human and Animal Nutrition units. The North America and EMEA regions benefited from the strength of the aromas business with higher volumes and a better product mix, particularly in the beverages segment.
Sales growth in Specialty Proteins helped the Specialty Ingredients unit, while sales and strong margins in probiotics contributed to the growth of the Health & Wellness category. The Animal Nutrition unit grew year over year due to demand and positive margins for amino acids, strength of feed additives and ingredients as well as improved performance in EMEA, which more than offset the detrimental effects of the COVID-19 pandemic. Management has raised its 2021 operating profit growth target for the Nutrition segment to 20%.
We believe that aggressive investments in the Nutrition Unit fuel growth and strengthen Archer Daniel’s position in this area. Shares of this company Zacks Rank # 3 (Hold) are up 26.4% year-to-date, compared to the industry’s 0.5% growth.
Image source: Zacks Investment Research
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