By Karl Plume
CHICAGO (Reuters) -Grains merchant Archer-Daniels-Midland posted its lowest fourth-quarter adjusted profit in six years on Tuesday on weak oilseed crush margins and uncertainty over U.S. biofuel policy and said it is cutting costs and slashing up to 700 jobs to weather the market downturn.
Chicago-based ADM said it aimed to cut costs by $500 million to $750 million over the next three to five years via job cuts and lower raw materials and manufacturing costs.
ADM shares were down 3% at $48.50 at midday on Tuesday.
Reuters had reported last week that the grain trader would soon start laying off employees in a global effort to cut costs, with the bulk of cuts expected in the United States, according to sources.
ADM did not provide details about the cuts, which would represent roughly 1.7% of its global workforce.
Sources told Reuters that layoffs are currently under way.
ADM’s profit has eroded amid slow demand and a global glut of staple crops like corn and soybeans, which it buys, sells, processes and ships around the world. Prices of both crops hit four-year lows in 2024 as global stocks of the food staples ballooned to multiyear highs, pressuring margins.
U.S. import tariffs and possible trade retaliation by China and other top buyers of American crops created additional headwinds for ADM.
“We’ve entered 2025 knowing that we need to remain agile to manage through shifts in both trade and regulatory policy around the world, along with the related impacts on geographic supply and demand,” CEO Juan Luciano told analysts on a conference call.
ADM forecast adjusted earnings in the range of $4 to $4.75 per share in 2025, the midpoint of which would represent a third straight annual decline in profit.
The guidance did not include potential impacts from a trade war.
Fourth-quarter operating profit in ADM’s agricultural services and oilseeds division, its largest segment, tumbled 32% from a year earlier on weak North American oilseed crushing margins and uncertainty around biofuel policies.
The company expects the division to post flat to lower operating profit this year, while earnings in its carbohydrate solutions division were expected to contract.
The company posted an adjusted profit of $1.14 per share for the three months ended Dec. 31, down 16% from $1.36 a year earlier and compared with analysts’ average estimate of $1.15 per share, according to data compiled by LSEG.
(Reporting by Karl Plume in Chicago and Vallari Srivastava in Bengaluru; Editing by Shreya Biswas, Emelia Sithole-Matarise and Matthew Lewis)
