Global grains merchant Archer-Daniels-Midland Co (ADM.N) beat Wall Street expectations for third-quarter profit on Tuesday on good ethanol and sweetener margins and strong Brazilian crop exports, although results were lower year on year.

Shares fell 3.5% to $69.85, bucking broader stock market gains, as a weaker-than-expected profit in ADM's large Ag Services and Oilseeds segment and its high-margin Nutrition unit overshadowed a strong quarter in Carbohydrate Solutions, which includes ethanol and sweeteners.

Chicago-based ADM raised its full-year earnings guidance to "in excess of $7 a share" from "around $7" after a strong year to date and a favorable market outlook. ADM also forecast a return to profit growth for Nutrition in 2024, but lowered 2023 profit guidance for the unit.

The company has capitalized on good demand for food, feed and biofuel, while record-large Brazilian corn and soybean harvests offset reduced supplies from drought-hit Argentina and war-torn Ukraine.

ADM's new North Dakota soy processing plant, which will ramp up to full capacity by early November, is set to benefit from strong U.S. soymeal demand, while top exporter Argentina is likely to run out of beans to crush next month, ADM CEO Juan Luciano said.

"The global market is increasingly dynamic, with factors that create both opportunities and challenges," said Luciano, citing "geopolitical tensions, inflationary pressures and the constantly adjusting balances of commodity supply and demand."

The company's longer-term outlook remains bright due to surging demand for crops to make biofuels.

Renewable diesel production capacity will double to 5 billion gallons a year by 2025 in a boon for soybean oil demand, Luciano said. Along with corn-based sustainable aviation fuel, production capacity for both fuels could swell to 14 billion or 15 billion gallons a year by 2026 or 2027, he said.

ADM posted an adjusted profit of $1.63 per share for the three months ended Sept. 30, above analysts' average estimate of $1.52 but short of the $1.86 in last year's third quarter, according to LSEG data.

Ag Services and Oilseeds operating profit fell 21% but Carbohydrate Solutions reported a 49% operating profit jump.

ADM's Nutrition segment posted lower results on weak demand for meat alternatives and downtime at a large soy processing facility following an accident in September.

"We feel pretty confident that Nutrition will return to growth in 2024, albeit maybe at a slightly lower growth rate than we had anticipated before," CFO Vikram Luthar said, adding that the unit could generate $1 billion annually in the medium term, up from an expected $600 million this year.

By Karl Plume
Additional reporting by Tanay Dhumal in Bengaluru; Editing by Tasim Zahid, Chizu Nomiyama, Mark Porter and Richard Chang