By Jamie Martin
Archer-Daniels-Midland (ADM.N) reported its weakest first-quarter profit in five years as trade disruptions and tariffs took a toll on the agribusiness giant.
The company’s largest division, ag services and oilseeds, saw its operating profit drop by more than 50%, mainly due to falling sales and declining crop-processing margins. These losses overshadowed the stable to slightly improved performance in ADM’s other divisions.
Despite the disappointing results, ADM’s stock rose 2.6% to $48.75, as the company still exceeded analysts’ expectations. CEO Juan Luciano acknowledged the ongoing challenges, stating, “With uncertainty related to global trade and regulatory policy continuing to have an impact on the business, we were able to drive positive momentum in focused areas.”
Rising trade tensions between the United States and China, the world’s top crop importer, have weighed heavily on ADM’s recent earnings. Abundant global crop supplies and shrinking margins have further eroded profits.
Compounding the company’s difficulties is the fallout from an accounting scandal that has led to federal investigations. Since the revelation in January last year, ADM’s share price has fallen nearly 30%.
To address these headwinds, ADM has launched a cost-reduction and consolidation strategy. In February, the company announced plans to trim costs by $500 million to $750 million over the next three to five years, including workforce reductions and scaled-down operations.
ADM reaffirmed its full year adjusted earnings guidance of $4 to $4.75 per share but noted that profits would likely fall toward the lower end of that range. While this would mark ADM’s weakest performance since 2020, it was still better than many investors had feared.
Arun Sundaram, senior equity analyst at CFRA Research, remarked, “Investors had generally expected much weaker guidance, given the sharp deterioration in the macroeconomic environment in recent months.”
The company’s ag services and oilseeds unit posted a 52% drop in operating profit during the first quarter. Meanwhile, its carbohydrate solutions division saw a 3% decline, though improved ethanol biofuel results helped cushion the impact of weaker starch and sweetener margins.
ADM’s nutrition segment, a smaller part of its portfolio, recorded a 13% rise in operating profit. Overall, the company reported an adjusted profit of 70 cents per share for the quarter ending March 31, down from $1.46 a year earlier, but still above the 67-cent average forecast from analysts polled by LSEG.
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