In This Article:
This story was originally published on Food Dive. To receive daily news and insights, subscribe to our free daily Food Dive newsletter.
Dive Brief:
-
Archer-Daniels-Midland Co. CEO Juan Luciano said its ingredients business is “"on the path to recovery,”" more than a year after the crop trader's nutrition unit was swept up in a broad accounting scandal.
-
Luciano said in an earnings call that demand for flavors, particularly among the beverage industry, raised operating revenue at the nutrition segment by 13% in the first quarter compared to last year.
-
The improved performance in nutrition was a small bright spot in an otherwise dour sales environment for ADM. Operating profits in the first quarter were down by 38% compared to the prior year, as the crop trader contends with trade uncertainty.
Dive Insight:
As the food and beverage industries face pressure from the Trump administration to phase out artificial dyes, ADM's ingredients unit is seeing more demand for natural colors, which Luciano hopes could drive future growth for the beleaguered nutrition business.
ADM's nutrition unit, which includes its flavor and ingredients businesses, has struggled to regain its footing following a criminal probe into the segment's accounting practices. The investigation, which looked into whether ADM overstated profits in the segment, prompted the departure of the company’s CFO and a significant downsizing of the company’s nutrition offerings.
The company has also seen delays in restarting operations at its specialty ingredient manufacturing facility in Decatur, Illinois, following a plant explosion in 2023. Luciano said the company made “important progress” in getting the facility back online, and that the plant is in the “final stages of recommissioning.”
ADM has moved to cut costs as tariffs and uncertainty in biofuel regulations pressure overall earnings. The company announced a plan to eliminate up to 700 jobs and potentially sell assets to generate approximately $750 million in savings.
It’s also focused on improving nutrition performance through a renewed focus on health and wellness. The company announced an agreement in February with Japan-based Asahi Group to distribute a postbiotic ingredient to improve sleep, stress and mood.
Flavor demand boosted revenue at ADM’s Human Nutrition subsegment by 4%, according to the company’s Q1 earnings.
“We continue to invest in R&D related to health and wellness solutions,” Luciano said on the call, adding that the company’s focus on nutrition is “beginning to show positive results.”