USA – Archer Daniels Midland Company (ADM), a global leader in agricultural services and products, finds itself navigating turbulent financial waters despite notable achievements in its sustainability initiatives.
The company’s first-quarter earnings for the fiscal year saw a significant decline, reflecting challenges stemming from low margins and operational disruptions at its Decatur facility in Illinois, USA.
Earnings amounted to US$729 million, or US$1.42 per share on common stock, marking a 38% decrease from the previous year’s first quarter.
Similarly, adjusted segment operating profit dropped by 24% to US$1.32 billion, while revenues experienced a notable 9% decline, totaling US$21.85 billion.
Executives at ADM had anticipated a challenging fiscal year, and the first quarter’s performance, characterized by lower pricing and execution margins, aligned with these expectations.
The downturn in earnings was primarily due to a combination of factors, including reduced crush margins and origination margins, as well as operational disruptions at the Decatur facility.
Juan R. Luciano, CEO and President of ADM, acknowledged the prevailing market conditions but emphasized the company’s proactive measures to mitigate challenges.
“Our teams are proactively taking action to manage through the cycle, driving structural earnings ROIC and cash flow generation,” Luciano stated during an earnings call on April 30.
In Ag Services and Oilseeds, adjusted operating profit fell 29% to US$864 million from US$1.21 billion.
“During the first quarter, the team executed on a strong forward book supported by meal demand, leading to executed soy crush margins of approximately US$50 per (tonne),” said Ismael Roig, senior vice president and interim chief financial officer.
In Carbohydrate Solutions, adjusted operating profit declined 11% to US$248 million from US$279 million.
The company anticipates the second quarter to be higher versus the prior year, driven by solid demand and margins in North American starches and sweeteners, partially set by moderating margins in wheat milling and international corn milling after elevated results in the prior year period.
In Nutrition, adjusted operating profit dropped 39% to US$84 million from US$138 million. Human nutrition fell 45% to US$76 million.
ADM’s regenerative agriculture program exceeds expectations
Despite the earnings setback, ADM continues to make strides in its regenerative agriculture program, surpassing its 2023 goal by expanding to over 2.8 million acres.
This achievement underscores ADM’s commitment to sustainability and carbon footprint reduction across its value chains.
Greg Morris, President of ADM’s Ag Services and Oilseeds business, highlighted the significance of scaling sustainability efforts.
“ADM is dedicated to driving positive change in the agricultural sector, and our leadership in regenerative agriculture is a testament to that commitment,” Morris emphasized.
Looking ahead, ADM remains steadfast in its commitment to sustainability, setting ambitious targets of 3.5 million regenerative acres in 2024 and aiming for 5 million globally by 2025.
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