ADM's profit forecast for 2026 is lower than expected amid uncertainty over US biofuel policy
Archer-Daniels-Midland on Tuesday forecast current-year adjusted profit below analysts' expectations ?as the uncertainty about U.S. biofuel policies and global trade upheaval that dragged on ?earnings ?last year remain a challenge for the grains merchant. ADM of Chicago, whose stock was down 2.3% on Tuesday morning, reported the weakest fourth quarter adjusted profit it has seen since 2019. This is due to poor U.S. exports and a decline in soybean processing margins across North and South America. A global grain glut has caused prices for staple crops such as?corn, soybeans and wheat to fall to multi-year lows. This has hurt ADM's profits and those of its agribusiness competitors Bunge and Cargill. The U.S. delays in biofuel policy and the trade tensions caused by President Donald Trump's Tariff Wars have put further pressure on global grain merchants. The 'U.S. The Securities and Exchange Commission and Justice Department have concluded their investigations into ADM's alleged inflating of the performance of an important business segment. ADM settled SEC charges by paying a $40 million civil penalty, while the DOJ closed their criminal investigation. This brought an end to the 'year-long scandal' that caused the company to revise twice its financial statements.
ADM reported adjusted earnings per share of 87 cents for the quarter ending December 31. This is down from $1.14 a piece a year ago, but still above the consensus analyst forecast of 80 cents. These data were compiled by LSEG.
The CEO of the company, Juan Luciano, said that the turbulent trade environment and uncertainty surrounding U.S. policy on biofuels would affect operating profits in 2025. He added that resolutions "should support us in a more positive operating environment in 2026."
The U.S. Government has taken a long time to finalize certain biofuel policies. This delay has led to a slowdown in the use of feedstocks such as the soybean oil produced by ADM processing facilities.
ADM reported adjusted earnings of $3.43 per share for 2025. The company's adjusted 2026 earnings outlook ranged from $3.60 per share to $4.25, depending on the biofuel policies in place and whether or not soy processing margins improved. LSEG data shows that the midpoint of analysts' estimates is $4.24 per share. In an analyst note from UBS, the company said that there is a high probability of earnings being at the upper end of the range once the RVO is finalized. It added that no resolution was a "very unlikely event." The Trump administration is expected to announce the long-delayed?biofuel blend quotas for 2026 by March. This will keep them near to their initial proposal, while dropping its plan to penalize imported renewable fuels and feedstocks.
Biofuel producers and feedstock suppliers like ADM have been slow to sign deals and make spending decisions, which can affect output and margins.
(source: Reuters)