Zinger Key Points
- Archer-Daniels-Midland's Q4 earnings miss estimates, but it plans $500-750M in cost savings and announces a 2% dividend increase.
- The company's AS&O segment saw a 32% profit decline, while its Nutrition segment turned profitable, posting an $88M operating profit.
Archer-Daniels-Midland Company ADM shares are trading lower on Tuesday.
The company reported fourth-quarter adjusted earnings per share of $1.14, missing the street view of $1.15. Quarterly sales of $21.50 billion missed the analyst consensus estimate of $22.66 billion.
Board Chair and CEO Juan Luciano commented, “With softer market conditions and policy uncertainty around the world going into 2025, we are focused on improving our operational performance, accelerating costs savings, and simplifying our portfolio.”
Ag Services & Oilseeds segment operating profit was $644 million during the fourth quarter of 2024, down 32% compared to the prior year quarter.
Carbohydrate Solutions segment operating profit was $319 million during the fourth quarter, up 3% compared to the prior year quarter.
Nutrition segment operating profit was $88 million during the fourth quarter, an increase from the segment operating loss of $10 million in the prior year quarter.
In 2024, cash flows from operating activities were $2.8 billion. Cash flows from operations before working capital were $3.3 billion. This compares to $4.5 billion and $4.7 billion in 2023, respectively.
“We are announcing targeted actions to deliver $500 – 750 million in cost savings over the next several years,” Luciano added.
Specifically, ADM expects to achieve most of the cost savings on an annual run-rate basis through improvement in manufacturing costs, reduced purchased materials and services, and targeted workforce reduction. The company currently expects a decrease of approximately 600 – 700 roles globally in 2025.
The company stated that it will continue to focus on disciplined capital allocation, prioritizing strategic investments with strong returns and returning cash to shareholders, including a 2% increase in its quarterly dividend.
The firm declared a cash dividend of 51.0 cents per share, up from 50.0 cents per share, on the company’s common stock. The dividend is payable on March 11.
Outlook: The company expects 2025 adjusted EPS of $4.00 to $4.75 (consensus $4.67), reflecting weaker market fundamentals and on-going biofuel and trade policy uncertainty.
Price Action: ADM shares are trading lower by 2.92% to $48.56 at last check Tuesday.
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