Driven by the growing demand for crops and other agricultural products in Asia, Archer Daniels Midland Company (ADM - Analyst Report) decided to streamline its investments in the Asia-Pacific region.
The company’s products have already been closely associated with the Asian market for many years. However, given the rising population and income levels in the continent, diets have also witnessed a remarkable improvement. Taking this into consideration, the company has decided to undertake specific actions to develop its operations in the region.
As part of its strategic initiatives, Archer Daniels recently made an announcement about constructing a soluble-fiber manufacturing complex and a sweetener facility in North China at the port of Tianjin. These will cater to the Chinese demand for superior quality food ingredients. The sweetener and soluble fiber facilities are anticipated to be fully operational in the beginning and by the second half of 2015, respectively.
Alongside, Archer Daniels has built a facility in Nanjing, China, to manufacture animal feed premix, which when combined with animal rations are likely to support optimal growth and good health. This facility, which is expected to complement the company’s existing Chinese operations, is slated to commence operations from mid 2015.
Also, with the acquisition of the remaining stake in Toepfer, the company will solidify its merchandising operations in the Asia-Pacific region. Further, in order to facilitate sales of better-value products, Archer Daniels plans to introduce sales offices of specialty ingredients in Philippines, Korea, Vietnam, Indonesia and Thailand. These offices will add to the company’s current teams in Japan, Australia, China and Singapore.
Additionally, the company plans to shift its regional headquarters to Singapore from Shanghai for a centralized coordination of its activities and effective management. The relocation of the regional headquarter coincides with Singapore developing into a hub of its regional merchandising business.
The company also introduced several management changes in its Chinese, Australian and South East Asian businesses to enhance operations, drive positive results and in turn strengthen its foothold in the region.
Archer Daniels is one of the leading agricultural commodity exporters to the Asia-Pacific region. The company also markets a wide assortment of animal feeds, feed premixes and food ingredients via its extensive sales channel in the region.
The company currently carries a Zacks Rank #3 (Hold). Other better-ranked stocks in the same sector include Fresh Del Monte Produce Inc. (FDP - Snapshot Report), Adecoagro S.A. (AGRO - Snapshot Report) and Restoration Hardware Holdings, Inc. (RH - Snapshot Report). While Fresh Del Monte carries a Zacks Rank #1 (Strong Buy), Adecoagro and Restoration Hardware carry a Zacks Rank #2 (Buy) each.