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Dive Brief:
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Chicago-based Archer Daniels Midland expects its 2025 earnings to be at the lower end of its $4 to $4.75 adjusted earnings per share guidance range given the “current market backdrop,” CFO Monish Patolawala said on the company’s earnings call Tuesday.
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In addition, the finance chief said that, “with the uncertainty related to tariff policy and macroeconomic conditions we are not providing segment operating guidance for future quarters, we are providing directional guidance for the full year.”
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The global grain merchant is taking steps to offset the headwinds it faces. Patolawala said the company is on track to cut $200 to $300 million — part of a previously announced program that includes layoffs — and noted that the company will improve its financial “flexibility” through inventory rationalization and more timely collection of past-due balances.
Dive Insight:
In the first quarter, the company reported net earnings sunk to $295 million compared to $729 million in the year-earlier period. The company’s agricultural services and oilseed segment, hit by trade and biofuels policy uncertainty, saw its operating profit roughly halved, falling to $412 million from $864 million, while its carbohydrate solutions segment’s operating profit fell just 3% to $240 million and its smaller nutrition segment saw its operating profit rise 13% to $95 million in the quarter.
Shares of ADM rose 1.7% to close at $48.32 Tuesday. Profits fell due largely to lower soy crush margins, but ADM's guidance for the year, even with with the nod towards the lower end of their prior guidance range, was above consensus estimates, so that is why the stock rose after the earnings report, Seth Goldstein, an equity analyst at Morningstar Research Services, said in an email. Goldstein also said he doesn’t expect to see “material” impacts from tariffs at the company.
“If China's tariffs on U.S. soybean exports remain in place post-U.S. harvest, I'd expect ADM would send more soybeans to other countries, while rerouting more South American soybeans to China, leading to little overall impact,” Goldstein wrote.
During the quarter, the company also said it was exiting trading operations in China and Dubai.
Asked on the earnings call for color about how the company plans to “replace” demand from China in the wake of the tariffs, CEO Juan Ricardo Luciano said a “significant” impact had not been felt in the first quarter. Still, he said the company was working with about 60,000 U.S. farmers to offset the tariffs’ impact. He also noted that President Trump’s 90-day pause on some tariffs gives the company some breathing room to negotiate agreements with different parties.
Separately, the CFO also noted that the company would navigate 2025 by focusing on what it can control. He reiterated his previous pledge to focus on improving its financial reporting, saying the company was committed to “remediating the material weakness and making strides to strengthen our internal controls.”