ADM Earnings: Margin Pressures Persist, but Fourth Quarter Recovery in Sight
- Hardik Shah
- Aug 5
- 3 min read
TLDR
📉 Revenue Strength: Q2 revenue softness driven by lower trade volumes and policy uncertainty in Ag Services & Oilseeds (AS&O).
📉 Margin Trends: Adjusted EPS down 10% YoY to $0.93; soybean and canola crush margins sharply lower.
📈 Forward Outlook: Full-year 2025 guidance tightened to ~$4.00 EPS, with stronger Q4 expected from biofuel tailwinds and Decatur East ramp-up.
Business Overview
Archer-Daniels-Midland Company (ADM) is a global leader in agricultural origination, processing, and nutrition solutions. Operating across three core segments—Ag Services & Oilseeds, Carbohydrate Solutions, and Nutrition—ADM connects crop supply with demand while advancing decarbonization, sustainable biofuels, and innovative human and animal nutrition products. Its global footprint spans processing plants, mills, and export hubs across North America, South America, Europe, and Asia.
ADM Earnings Q2'25
Net earnings: $219 million
Adjusted EPS: $0.93 (↓10% YoY)
Total segment operating profit: $830 million (↓10% YoY)
Cash from operations (YTD): $1.2 billion before working capital
Segment Performance:
Ag Services & Oilseeds: $379M (↓17%)
Crushing subsegment down 75% due to weaker vegetable oil demand and biofuel uncertainty
Carbohydrate Solutions: $337M (↓6%)
Pressure from international corn cost and starch demand softness
Nutrition: $114M (↑5%)
Flavors and Animal Nutrition saw sequential improvement; Specialty Ingredients hurt by Decatur East ramp-up delays
Forward Guidance
Management Outlook
ADM narrowed its FY 2025 adjusted EPS forecast to approximately $4.00, banking on a stronger Q4:
“We are well-positioned to exit 2025 with strong momentum and remain confident in our ability to execute on opportunities that may emerge with greater policy clarity.” — Juan Luciano, CEO
Risks & Opportunities
Opportunities:
Finalized RVO (Renewable Volume Obligation) targets for 2026–2027 and extension of the 45Z biofuel producer tax credit support soybean oil demand and crush margins
Decatur East facility expected to be fully online, reducing Specialty Ingredients costs
Risks:
Lower starch demand for paper/corrugated boxes and ethanol margin compression remain headwinds
Timing delays in contract repricing limit Q3 upside
Operational Performance
ADM continues to optimize its network for cost and efficiency:
Shuttered non-core facilities across Florida, Ecuador, Brazil, and Europe
Finalized JV for Lubbock, TX cottonseed plant
Achieved best uptime performance in 5+ years across operations
“We achieved our best performance in limiting unplanned downtime in more than five years.” — Juan Luciano, CEO
Segment Performance Snapshot:
Ag Services & Oilseeds:
Margin weakness due to commodity price softness, weak farmer selling, and policy drag
Carbohydrate Solutions:
Corn cost pressures in EMEA; North America held firm with sweetener margin gains
Nutrition:
Flavors up; Specialty Ingredients and Health & Wellness down due to Decatur plant delays
Market Insights
ADM highlighted softness in biofuel and vegetable oil demand earlier in the quarter due to policy ambiguity. With regulatory clarity emerging, global crush margins are expected to rebound in Q4, especially in North America. Trade dynamics, especially with China, remain key to export season success.
Consumer Behavior & Sentiment
While ADM is not a consumer-facing brand, it noted strong volume growth in wheat milling with key downstream customers, suggesting stable end-market demand. Flavors also saw stronger margins driven by premiumization trends and expanded volume in North America.
Strategic Initiatives
Decarbonization: Converting fatty acid residues to biofuel
Portfolio Simplification: Asset sales and divestitures in AS&O and Specialty Ingredients
Innovation Investment: Focus on natural flavors, probiotics, and co-product reuse
“We’ve never stopped smart organic investments... including converting fatty acid residues into biofuels and expanding into new markets.” — Juan Luciano
Capital Allocation
Dividends: 374th consecutive quarterly dividend declared
Buybacks: Not specified, but capital discipline emphasized
CapEx: $596M YTD; 2025 outlook lowered to $1.3–$1.5B (from $1.5–$1.7B)
Leverage Ratio: 2.1x; solid cash position maintained
The Bottom Line
ADM navigated a tough first half marked by margin compression and policy uncertainty, yet management remains bullish on a stronger back half. Key watchpoints include:
Q4 execution on improved crush margins
Continued recovery in Nutrition, especially Specialty Ingredients
Follow-through on cost savings and asset optimization
Potential upside from increased farmer selling and strong export season
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