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Archer Daniels (ADM) Expands Alternative Protein Production

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·4 min read
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Archer-Daniels-Midland Company ADM has shared expansion plans to tap flourishing demand for alternative proteins. ADM looks forward to make investments of roughly $300 million to expand its Decatur, IL, alternative protein production. Moreover, it will enhance the alternative protein capabilities by opening a state-of-the-art Protein Innovation Center in Decatur. The center will support innovation and efficiently cater to customer needs.

The latest expansion will significantly improve Archer Daniels’ alternative-protein capabilities. This will boost soy protein concentrate capacity, almost doubling the extrusion capacity at the Decatur complex. The project is likely to be concluded in first-quarter 2025, subject to all the applicable approvals. The production capabilities will drastically increase on the back of the latest technologies and processes, including the top control technology.

The Protein Innovation Center will further enhance the Decatur-based innovation complex, joining Archer Daniels’ Food Application Center and Animal Nutrition Technology Center. This will focus on expanding ADM’s ability to work closely with customers to build custom solutions to serve well. The innovation center will have labs, test kitchens and pilot-scale production capabilities to boost innovation from diversified ingredients to highly sustainable and efficient processing plus unique texture, taste and nutrition.

Encouragingly, demand for the alternative proteins is steadily growing fast. The alternative proteins in foods and nutrition solutions are witnessing a 10% CAGR. These include alternative meat and dairy sales, which are expected to increase 14% annually and hit $125-billion in 2030. Hence, Archer Daniels looks forward to raise its global alternative protein production capacity more than 30%. We note that ADM is benefiting from Sojaprotein, a key European provider of non-GMO human nutrition protein solutions, which was bought last year.

What Else?

Archer Daniels has been gaining from a robust performance in its Nutrition segment. In fourth-quarter 2021, revenues at the segment rose 19% year over year. The segment’s adjusted operating profit grew 26% year over year owing to significant gains in the Human and Animal Nutrition units. The Human Nutrition unit gained from strength across all businesses. The animal nutrition unit is also performing well, driven by strength in amino acids.

Archer Daniels’ significant progress in its three strategic pillars, namely optimize, drive and grow, looks quite encouraging. As part of ADM’s optimizing pillar, management continues to align its operations with consumers’ changing nutritional preferences. Under its drive pillar, ADM continues to adapt its organizational structure to meet operational excellence and set goals. Further, under the growth pillar, ADM is looking to expand its footprint in the fast-growing alternative protein. The nutrition leader is also utilizing innovative technologies to develop new products and boost its operating capabilities.

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Driven by these strengths, the currently Zacks Rank #2 (Buy) stock has gained 62.4% in the past year against the industry’s 1.3% dip.

Other Stocks to Consider

Some other top-ranked stocks in the Consumer Staples sector are Flower Foods FLO, Albertsons Companies ACI and Sysco SYY.

Flower Foods currently has a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Flower Foods’ current financial-year sales and earnings per share (EPS) suggests growth of 7.2% and 4%, respectively, from the corresponding year-ago period’s reported figures.

Albertsons Companies currently flaunts a Zacks Rank of 2. ACI has a trailing four-quarter earnings surprise of 30.6%, on average.

The Zacks Consensus Estimate for Albertsons Companies’ current financial-year sales suggests growth of 2.6% from the year-ago period’s reported figure.

Sysco is currently Zacks #2 Ranked. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.

The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings suggests growth of 30.4% and 120.1%, respectively, from the corresponding year-ago period’s figures.


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