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Archer-Daniels-Midland Co (ADM)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was in line with management’s outlook but showed pronounced pressure in Ag Services & Oilseeds; adjusted EPS was $0.70 (vs $0.67 consensus)* and GAAP EPS was $0.61; revenue was $20.18B vs $22.05B consensus, a significant miss driven by lower vegetable oil and meal values amid biofuel and trade-policy uncertainty .*
  • Management reaffirmed full-year 2025 adjusted EPS guidance of $4.00–$4.75 and now expects to deliver at the lower end given current market conditions .
  • Segment operating profit fell 38% YoY; AS&O declined 52% YoY on weaker crush and biodiesel margins, while Nutrition improved 13% with Flavors and Animal Nutrition strength .
  • Call tone emphasized “self-help”: $200–$300M 2025 cost savings toward a $500–$750M multi‑year target, operational realignment, targeted network consolidation, and Decatur East recommissioning (P&L impact expected in H2 2025) .

What Went Well and What Went Wrong

What Went Well

  • Nutrition segment operating profit increased 13% YoY to $95M, led by Flavors and Animal Nutrition margin improvements, with management citing “green shoots” and a path to recovery . Quote: “In Nutrition, we see green shoots with improved operating profit performance.”
  • Carbohydrate Solutions delivered “solid operational results”; Vantage Corn Processors turned to positive operating profit ($33M) on higher ethanol volumes and improved margins . Quote: “Our Carbohydrate Solutions team delivered solid results… along with strong execution in ethanol.”
  • Execution/cost agenda advanced: targeted workforce reduction, SG&A control, plant/network consolidation (e.g., Kershaw crush closure), and automation/digitization projects to drive savings and reliability; Decatur East is moving into final recommissioning stages .

What Went Wrong

  • Crushing operating profit fell 85% YoY on increased industry capacity, competitive Argentine meal exports, higher manufacturing costs, and lower vegetable oil demand due to biofuel/trade-policy uncertainty .
  • AS&O overall declined 52% YoY, with Ag Services down 31% (lower volumes/margins, negative timing and export duties), and RPO down 21% (biodiesel/refining margin pressure) .
  • Working capital headwinds drove cash used in operating activities of $(342)M for Q1; consolidated revenue declined to $20.18B (from $21.85B in Q1 2024), and gross profit compressed .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$19.94 $21.50 $20.18
Diluted EPS – GAAP ($)$0.04 $1.17 $0.61
Adjusted EPS ($)$1.09 $1.14 $0.70
Gross Profit ($USD Billions)$1.37 $1.36 $1.18
Total Segment Operating Profit ($USD Billions)$1.04 $1.05 $0.75

Q1 2025 Actual vs Consensus (S&P Global):

MetricQ1 2025 ActualQ1 2025 Consensus# of Estimates
Adjusted EPS ($)$0.70 $0.67*9*
Revenue ($USD Billions)$20.18 $22.05*7*

Values with asterisk retrieved from S&P Global.

Segment Operating Profit – Q1 2025 vs Q1 2024:

Segment ($USD Millions)Q1 2025Q1 2024% Change
Total Segment Operating Profit$747 $1,196 (38)%
Ag Services & Oilseeds$412 $864 (52)%
• Ag Services$159 $232 (31)%
• Crushing$47 $313 (85)%
• Refined Products & Other$134 $170 (21)%
• Wilmar (equity earnings)$72 $149 (52)%
Carbohydrate Solutions$240 $248 (3)%
• Starches & Sweeteners$207 $261 (21)%
• Vantage Corn Processors$33 $(13) NM
Nutrition$95 $84 +13%
• Human Nutrition$75 $76 (1)%
• Animal Nutrition$20 $8 +150%

Selected KPIs:

KPIQ3 2024Q4 2024Q1 2025
Trailing 4Q Adjusted ROIC (%)8.8% 8.3% 7.0%
Trailing 4Q ROIC (%)6.6% —5.4%
Cash flows from ops before working capital ($USD Millions)—$3,300 FY $439
Processed volumes – Oilseeds (000 MT)8,410 9,050 9,091
Processed volumes – Corn (000 MT)4,943 4,708 4,581

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$4.00–$4.75 Reaffirmed $4.00–$4.75; expect lower end Maintained; bias to low end
Soy crush margins (execution, $/ton)FY 2025$45–$55 $40–$65 (full-year range revised) Range widened; lower low-end, higher high-end
Canola crush margins (execution, $/ton)FY 2025$50–$70 $45–$65 Lowered both ends
AS&O segment directionalFY 2025—Lower than prior year Lowered
Carbohydrate Solutions directionalFY 2025Slightly lower vs 2024 Unchanged directional Maintained
Nutrition directionalFY 2025Higher vs 2024 Unchanged directional Maintained
Corporate costsFY 2025$1.7–$1.8B Unchanged (no update) Maintained
CapexFY 2025$1.5–$1.7B Unchanged (no update) Maintained
D&AFY 2025~ $1.2B Unchanged (no update) Maintained
Effective tax rateFY 202521–23% Unchanged (no update) Maintained
Insurance proceedsFY 2025~ $60M Unchanged (no update) Maintained
Dividend2025$0.51/quarter declared Feb-25 No change in Q1 release Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Dec-3)Q4 2024 (Feb-4)Q1 2025 (May-6)Trend
Biofuel policy (RVO/45 guidance)Regulatory uncertainty pressuring margins; preparing for soft 2025 Expect clarity on 45 guidance to support vegetable oil demand in H2 2025 RVO seen as key driver; without margin recovery, ~$0.50 EPS headwind; engaged with administration Cautious → leaning on H2 recovery
Crush marginsBoard crush under pressure; abnormal curve dynamics Near-term margins below expectations; H2 carry signals improvement Q1/Q2 lower vs PY; full-year soy $40–$65; canola $45–$65 H1 down, H2 potential improvement
Nutrition/Decatur EastRestart delayed to Q1 2025; headwind Q4 OP $88M; insurance proceeds; ongoing headwinds Recommissioning progressing; P&L impact in H2; ~$25M/quarter when down Recovery progressing
Cost savings/self-helpProductivity/portfolio optimization focus $500–$750M multi‑year; $200–$300M in 2025; workforce reduction SG&A reduction, network consolidation, automation/digitization Execution ramping
Trade/tariffsScenario planning; China corn imports lower Monitoring tariff scenarios; agile footprint Limited Q1 impact; USTR Section 301 mitigated ag export risk Managed risk
EthanolVCP pressured on margin; inventories high Slightly above breakeven in Q2 after slightly below in Q1 VCP OP improved YoY in Q1; ethanol EBITDA margins slightly negative Gradual stabilization

Management Commentary

  • CEO: “ADM delivered results aligned with our outlook and the market expectations for the first quarter… we are reaffirming our full-year guidance for 2025, but expect to deliver at the lower end of the range, given current market conditions.”
  • CFO on H2 recovery: “We still expect better crush and biodiesel margins in the second half of the year… and have already taken several actions that are delivering savings.”
  • CEO on operations: “We are now live with Decatur East and expect to have the plant at full run rate by the end of the second quarter.”
  • CEO on safety: “Our Q1 total recordable incident rate was the lowest it has been in the history of ADM.”

Q&A Highlights

  • RVO and crush cadence: Management widened soy crush margin guidance to $40–$65 and canola to $45–$65 for 2025, noting Q2 trending below Q1 and expecting H2 ramp; absent improvement, ~$0.50 EPS headwind .
  • RPO outlook: Despite a short-run improvement, management continues to expect RPO to be “significantly low versus the prior year” given pretreatment capacity, UCO imports, and 45V implementation .
  • Tariffs: Minimal Q1 impact; 98% of products into Mexico/Canada exempt; USTR’s Section 301 mitigated ag export risk; U.S. uncompetitive to China until U.S. harvest (Oct–Dec) .
  • Decatur East: Ramp ongoing; P&L contribution expected in H2; plant downtime had been ~$25M per quarter negative impact .
  • Ethanol: Q1 slightly below breakeven EBITDA; expect slightly above breakeven in Q2 .

Estimates Context

  • Q1 2025: Adjusted EPS of $0.70 beat consensus $0.67 by ~$0.03; revenue of $20.18B missed $22.05B. Management attributed miss to sharply lower vegetable oil/meal values from biofuel/trade-policy uncertainty and increased crushing capacity, which compressed margins .*
  • Estimate stance: Consensus likely to bias lower on AS&O given Q2 margins trending below Q1 and management lowering AS&O directional guide; potential upward bias for Nutrition on Flavors/Animal execution and Decatur East H2 recovery .

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • H1 2025 is margin-constrained in AS&O; the stock’s near-term path hinges on RVO/45 clarity and observable improvement in replacement crush margins—watch EPA actions and RINs; management flagged ~$0.50 EPS downside if margins do not recover .
  • Self-help is tangible: $200–$300M 2025 cost savings, plant/network consolidation, and automation/digitization should partially offset external pressures; monitor SG&A trajectory and manufacturing KPIs .
  • Nutrition recovery under way, with Flavors and Animal Nutrition driving OP growth and Decatur East expected to contribute in H2; favorable for medium-term mix and margin quality .
  • Revised crush margin ranges (soy $40–$65; canola $45–$65) imply wider outcome dispersion; position sizing should reflect H2 policy risk and global supply dynamics .
  • Cash generation saw Q1 working-capital headwinds; balance sheet remains strong, but revenue/OP volatility can persist—watch operating working capital discipline and cash flow normalization through H2 .
  • Guidance reaffirmed with low-end bias; consensus EPS likely to converge toward lower bound absent rapid policy clarity or margin recovery—trade around events (EPA/RVO, tariff headlines) and H2 narrative .
  • Dividend increased in Q1 (announced Feb-25), but buybacks were absent in Q1; capital returns remain part of the disciplined framework subject to external conditions .