ADM warns that 2025 profits will be lower than forecast due to tariffs
Grain trader Archer-Daniels-Midland on Tuesday posted its lowest first-quarter profit in five years and said it expects annual adjusted earnings at the low end of its prior forecast range due to macroeconomic uncertainty and trade tariff headwinds.
ADM's largest division, ag services and oil seeds, saw its operating profit plummet by over half due to weak crop-processing margins. This was more than offset by flat or stronger results across its other business segments.
ADM shares rose in pre-market trade as results exceeded Wall Street expectations.
ADM's profit has been dwindling in recent quarters as a result of abundant global crop supplies, and thinned margins.
ADM also suffered from a scandal involving its accounting last year, which sparked federal inquiries and sent the stock price plummeting. Shares have fallen by 30% since January of last year when news broke about financial irregularities.
In response to these challenges, the company has begun a consolidation and cost-cutting drive. ADM announced in February that it would cut costs between $500 million and $750 million within the next three to five year period. Since then, ADM has reduced its workforce and scaled back operations.
ADM confirmed its forecast for adjusted earnings per share of $4.75 to $4.75, but stated that it expected profit at the lower end. According to LSEG, it would be the company’s worst performance since 2020.
ADM's carbohydrate solution division saw earnings drop 3% in the first quarter as ethanol biofuels offset falling sweeteners results.
The first-quarter performance of the global grain merchant was boosted by a 13% increase in operating profit for the much smaller nutrition segment, as well as lower costs.
According to LSEG, the Chicago-based firm posted an adjusted profit per share of 70 cents for the three months ending March 31. This is down from $1.46 in the first quarter of last year but still above the average analyst estimate of 67. Reporting by Karl Plume from Chicago and Mrinalika in Bengaluru. Editing by Shinjini Ganuli and Hugh Lawson.
(source: Reuters)
