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Archer Daniels Midland 2024 Performance

  • Writer: Hardik Shah
    Hardik Shah
  • Feb 4
  • 3 min read
Concept by Alphasumer, Illustrated by ChatGPT
Concept by Alphasumer, Illustrated by ChatGPT

TLDR

  1. Financial Performance Decline: ADM reported Q4 adjusted EPS of $1.14, down 16% YoY, and full-year adjusted EPS of $4.74, in line with guidance but a 32% YoY decline. Total segment operating profit was $1.1B for Q4, reflecting weaker market conditions and policy uncertainty.

  2. Operational Challenges & Cost Savings Plan: The company faced biofuel and trade policy uncertainty, increased competition, and lower crush margins. ADM announced $500M–$750M in cost savings over the next 3–5 years, including workforce reductions.

  3. Cautious 2025 Outlook: Management expects a tough first half, with AS&O segment profits down 50% in Q1, but sees margin improvement in the second half. 2025 EPS guidance is $4.00–$4.75, reflecting weaker fundamentals and macro risks.


Business Overview

ADM (Archer-Daniels-Midland) is a global leader in agricultural supply chain management, processing, and nutrition. The company operates in three primary segments:

  • Ag Services & Oilseeds (AS&O): Involves global grain origination, transportation, and oilseed processing.

  • Carbohydrate Solutions: Produces sweeteners, starches, and ethanol.

  • Nutrition: Provides human and animal nutrition solutions, including specialty ingredients.

ADM serves the food, beverage, animal nutrition, biofuel, and industrial sectors, leveraging its global asset network.


Financial Results


Q4 2024 Highlights:

  • Revenue: $21.5B, down from $23B YoY.

  • Total Segment Operating Profit: $1.05B, down 16% YoY.

  • Adjusted EPS: $1.14, a 16% decline from Q4 2023.

  • Net Earnings: $567M, compared to $565M in Q4 2023.


Full-Year 2024 Highlights:

  • Revenue: $85.5B, down from $93.9B in 2023.

  • Total Segment Operating Profit: $4.2B, down 28% YoY.

  • Adjusted EPS: $4.74, compared to $6.94 in 2023.

  • ROIC: 8.3%, reflecting lower profitability.

  • Cash Flow from Operations: $3.3B, a 30% YoY decline.


Operational Performance


Successes & Milestones

  • Increased production efficiency: Strong crush volumes in canola and rapeseed, particularly in LATAM.

  • Improved North America soy crush operations, with reduced unplanned downtime.

  • Starches & Sweeteners saw record profits, with 3% higher production volumes YoY.

  • Safety improvements: 35% YoY reduction in safety incidents.

  • Growth in Flavors & Biosolutions: Recent acquisitions drove double-digit revenue growth in these segments.


Challenges & Risks

  • Biofuel and trade policy uncertainty impacted crush margins and demand.

  • Soybean and canola crush margins declined significantly due to increased supply from Argentina and North America.

  • Nutrition segment struggled with weak consumer demand and high costs.

  • Cost pressures: Higher manufacturing and raw material costs impacted profit margins.


Market Insights

  • Crush margins are under pressure due to high global soybean stocks and increased competition.

  • Biofuel policy uncertainty continues to weigh on refining margins.

  • Soybean oil demand expected to rebound as regulations on used cooking oil (UCO) imports tighten.

  • Global biofuel expansion (Brazil, Europe) provides long-term upside for vegetable oil markets.

  • Livestock feed demand is expected to grow, supporting soybean meal demand.


Strategic Initiatives

  1. Cost Optimization & Portfolio Simplification:

    • $500M–$750M in targeted cost savings over 3–5 years.

    • 600–700 job reductions planned, including 150 unfilled positions.

    • Focus on asset optimization: Streamlining operations and exploring divestitures worth $2B.

  2. Growth & Innovation:

    • Investing in digital transformation and automation to improve efficiency.

    • Expanding biofuel and sustainable agriculture solutions, such as regenerative farming.

    • Increased focus on biosolutions, flavors, and health & wellness.

  3. Capital Allocation:

    • Increased dividend by 2% (93rd consecutive year).

    • $100M share repurchase program extension.

    • Maintaining leverage ratio around 2.0x.


Forward Guidance

  • Q1 2025 AS&O segment operating profit expected to be down ~50% YoY.

  • Crush margins remain weak in H1 but are expected to improve in H2.

  • Nutrition expected to recover in H2, driven by cost savings and operational improvements.

  • 2025 adjusted EPS guidance: $4.00–$4.75, reflecting ongoing market headwinds.


The Bottom Line

  • ADM is navigating a challenging macro environment but is taking proactive cost-cutting measures.

  • Short-term pressure on crush margins and biofuels, but long-term growth drivers remain intact.

  • Investors should expect near-term volatility, with a stronger H2 2025 performance.

  • Potential regulatory clarity (biofuels, tariffs) could be a major catalyst for ADM’s profitability rebound.

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