ADM CFO: 2025 earnings expected at lower end of guidance range
Chicago agricultural giant ADM stated in an earnings call that, affected by the current market environment, 2025 earnings are expected to be at the lower end of its previously provided adjusted earnings guidance of $4 to $4.75 per share. CFO Monish Patolawala said that due to tariff policy and macroeconomic uncertainty, the company will only provide full-year directional guidance and will no longer provide quarterly segment operating guidance. The company is addressing headwinds through cost cuts, inventory optimization, and enhanced collections, and reiterated its commitment to remediating internal controls over financial reporting.
At a Glance
- Chicago-based Archer-Daniels-Midland (ADM) expects its 2025 adjusted earnings per share to come in at the lower end of its previously announced guidance range of $4 to $4.75, citing the "current market environment." Chief Financial Officer Monish Patolawala made the remarks during the company's earnings call on Tuesday.
- Patolawala also said, "Given the uncertainty around tariff policy and the macroeconomic environment, we are no longer providing segment operating guidance for future quarters, only full-year directional guidance."
- The global grain trader is taking steps to hedge against the headwinds it faces. Patolawala said the company is on track to achieve its goal of cutting costs by $200 million to $300 million—part of a previously announced plan that includes layoffs—and noted that it would enhance financial "flexibility" through inventory rationalization and accelerating the collection of overdue receivables.
In-Depth Analysis
In the first quarter, ADM reported net earnings fell to $295 million from $729 million in the same period last year. Hit by uncertainty over trade and biofuel policies, operating profit in the Ag Services & Oilseeds segment nearly halved to $412 million from $864 million; operating profit in the Carbohydrate Solutions segment fell only 3% to $240 million; and the smaller Nutrition segment saw operating profit rise 13% year-over-year to $95 million.
On Tuesday, ADM shares rose 1.7% to close at $48.32. Seth Goldstein, equity analyst at Morningstar Research Services, said in an email that the earnings decline was mainly due to lower soybean crushing margins, but even though the company signaled full-year results would be at the lower end of its prior guidance range, its full-year guidance was still above consensus expectations, which is why the stock rose after the earnings release. Goldstein also said he does not expect tariffs to have a "material" impact on the company.
"If tariffs on U.S. soybean exports to China remain unchanged after the U.S. soybean harvest, I expect ADM would ship more soybeans to other countries while diverting more South American soybeans to China, and the overall impact would be very limited," Goldstein wrote.
During the quarter, the company also announced it would exit its trading operations in China and Dubai.
On the earnings call, when asked how the company plans to "replace" demand from China amid tariffs, CEO Juan Ricardo Luciano said it had not yet felt a "significant" impact in the first quarter. However, he mentioned that the company is working with about 60,000 U.S. farmers to offset the impact of tariffs. He also noted that the 90-day pause on some tariffs imposed by President Trump gives the company breathing room to negotiate agreements with various parties.
In addition, the CFO said the company would navigate 2025 by focusing on factors within its control. He reiterated a previous commitment to improving financial reporting, saying the company is dedicated to "remediating material weaknesses and making progress on strengthening internal controls."