Archer Daniels Midland (ADM), a leading global agricultural processing and commodities trading corporation, reported its lowest fourth-quarter adjusted profit in six years. The company cited weak oilseed crush margins, uncertainty surrounding U.S. biofuel policy, and a global grain glut as contributing factors to the decline. In response, ADM announced significant cost-cutting measures, including the elimination of up to 700 jobs.
ADM outlined a plan to reduce costs by $500 million to $750 million over the next three to five years. These savings will be achieved through a combination of job cuts, reductions in raw material expenses, and streamlining manufacturing processes. The job cuts represent approximately 1.7% of ADM’s global workforce and, according to sources, are already underway. Following the announcement, ADM shares fell 3% to $48.50.
Several factors have contributed to ADM’s declining profits. A global oversupply of key crops like corn and soybeans has depressed prices, squeezing margins for agricultural processors and traders. Both corn and soybean prices reached four-year lows in 2024, resulting in multi-year high global stockpiles. This challenging market environment has been further exacerbated by U.S. import tariffs and the potential for retaliatory trade measures from major agricultural importers like China.
CEO Juan Luciano acknowledged the challenging market dynamics, stating that ADM needs to remain agile in navigating shifts in trade and regulatory policies, along with their impact on global supply and demand. The company projects adjusted earnings per share for 2025 to be in the range of $4 to $4.75. The midpoint of this guidance would mark a third consecutive year of declining profits. Importantly, this forecast does not account for the potential negative impacts of an escalating trade war.
ADM’s largest business segment, agricultural services and oilseeds, experienced a significant 32% drop in operating profit compared to the previous year. This decline was primarily attributed to weak North American oilseed crushing margins and uncertainty surrounding government biofuel policies. The company anticipates flat to lower operating profit in this division for the current year, with further contraction expected in its carbohydrate solutions division.
For the fourth quarter ending December 31st, ADM reported adjusted earnings of $1.14 per share, a 16% decrease from the $1.36 per share earned in the same period last year. This result was slightly above analysts’ average estimate of $1.15 per share.
In conclusion, ADM’s latest earnings report reveals the significant challenges facing the agricultural processing and commodities trading sector. The company’s cost-cutting initiatives, including job reductions, underscore the seriousness of the current market downturn and the need for adaptation. While ADM navigates these headwinds, investors will be closely monitoring the company’s performance and its ability to execute its strategic plan in the face of ongoing uncertainty.
