Canada Markets open in 2 hrs 26 mins

Archer Daniels (ADM), LG Chem Reunite to Meet Bioplastic Demand

·3 min read

Archer Daniels Midland Company ADM expanded its collaboration with LG Chem to launch two joint ventures (JVs) to meet the growing demand for plant-based products, including bioplastics. This move follows the booming demand for plant-based products. Bioplastics and biopolymers demand is predicted to grow from $10.7 billion in 2021 to $29.7 billion by 2026.

The production facility for lactic acid and polylactic acid will be at Decatur, IL. The construction of the production facility is expected to begin in 2023, with production likely to start in late 2025 or early 2026. Also, this initiative will create 125 jobs in the Decatur region.

GreenWise Lactic, its first joint venture, is expected to produce up to 150,000 tons of high-purity corn-based lactic acid on an annual basis. Being the majority owner of this JV, Archer Daniels will provide fermentation capacity from its Decatur bioproducts facility. The second joint venture LG Chem Illinois Biochem, majorly owned by LG Chem, will use products from the first JV, GreenWise Lactic, to produce nearly 75,000 tons of polylactic acid per year.

Prior to this, Archer Daniels collaborated with LG Chem to produce lactic and polylactic acids for bioplastics, which is a plant-based product. Such endeavors are likely to help attain 10% revenue growth on an annual basis.

ADM has been making efforts to expand its solutions portfolio, which forms part of its Carbohydrate Solutions unit. As a result, it previously launched the BioSolutions platform to expand its portfolio of sustainable higher-margin solutions, particularly for pharmaceuticals and personal care markets. With the addition of these two JV’s, the company is likely to expand its ability to meet the growing demand for the said products. Notably, the BioSolutions platform boasts $136 million in year-over-year revenue growth in the first half of 2022.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

We note that this Zacks Rank #2 (Buy) stock gained 27.4% year to date outperforming the industry’s growth of 23.5%.

Stocks to Consider

We highlighted some other top-ranked stocks from the broader Consumer Staples space, namely General Mills GIS, Chef Warehouse CHEF and Campbell Soup CPB.

Chef’s Warehouse, a distributor of specialty food products in the United States, currently flaunts a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 372.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales and earnings per share suggests growth of 38.1% and 2540%, respectively, from the year-ago reported numbers.

Campbell Soup, the manufacturer and marketer of high-quality, branded convenience food products, currently carries a Zacks Rank #2. It has an expected long-term earnings growth rate of 1.6%.

The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings per share suggests growth of 10.1% and 15.4%, respectively, from the year-ago reported numbers. CPB has a trailing two-quarter earnings surprise of 10.8%, on average.

General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2. GIS has a trailing four-quarter earnings surprise of 6.5%, on average.

The Zacks Consensus Estimate for General Mills’ current financial year sales and EPS suggests growth of almost 2% and 1.5%, respectively, from the corresponding year-ago reported figures.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
 
Campbell Soup Company (CPB) : Free Stock Analysis Report
 
The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research