Archer-Daniels-Midland Co. (NYSE:ADM) experienced a larger-than-anticipated decline in quarterly profit as the company navigates a downturn in the crop markets.
Chicago-based ADM reported earnings excluding some items of $1.03 per share for the second quarter, representing a 46% decrease from the previous year. This was the lowest profit for the period since 2020, falling short of the $1.24 average forecast by analysts surveyed by Bloomberg. Shares of ADM fell by 2.4% in pre-market trading in New York.
Profits for crop traders have been pressured by increased supplies of grains and reduced price volatility, reversing the previous years’ gains driven by crop losses and trade disruptions that pushed grain prices to record highs. The profitability from processing soybeans into meal and oil—an important revenue stream for ADM—has also diminished due to heightened competition from used cooking oil imports into the US.
ADM cited slower farmer sales in Brazil, the leading soybean producer, and higher logistics costs from take-or-pay contracts as factors contributing to significantly lower margins in its largest business segment. The company also faced limited trading opportunities in North America as increased supplies from Brazil and Argentina shifted export competitiveness toward South American sources.
The company’s nutrition unit saw a sharp drop in profits from the previous year, primarily due to unexpected downtime at its Decatur East facility, rising costs, and decreased prices for food ingredients like emulsifiers. Conversely, profits increased in the corn milling segment, supported by higher margins from starches and sweeteners and a rise in ethanol exports.
ADM’s operations generated approximately $1.7 billion in cash during the first half of the year, down from $2.5 billion the previous year. The company spent $2.3 billion on share repurchases during the period, an increase from $1 billion spent a year earlier.
ADM maintains its full-year earnings forecast between $5.25 and $6.25 per share, expecting improved margin opportunities for the remainder of the year.
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Author Faith Yakubu 
