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ADM Q4 Earnings Beat, Ag Services & Oilseeds Unit Hurts Revenues
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Archer Daniels Midland Company (ADM - Free Report) posted mixed fourth-quarter 2024 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed. Both metrics declined on a year-over-year basis.
Adjusted earnings of $1.14 per share surpassed the Zacks Consensus Estimate of $1.07. However, the figure decreased from earnings of $1.36 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.17 per share, up 10.4% from the year-ago quarter’s $1.06.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Insight Into ADM’s Q4 Performance
Revenues fell 6.5% year over year to $21.5 billion and lagged the consensus estimate of $21.9 billion. The top line was hurt by lower revenues at its Ag Services & Oilseeds unit.
Archer Daniels Midland Company Price, Consensus and EPS Surprise
Segment-wise, revenues for Ag Services & Oilseeds fell 8.6% year over year to $16.9 billion, while Carbohydrate Solutions’ revenues increased 7.7% year over year to $2.8 billion. Nutrition’s revenues grew 5.9% year over year to $1.8 billion. The Zacks Consensus Estimate for the segments’ revenues was pegged $17.2 billion, $2.4 billion and $1.7 billion, respectively.
The gross profit decreased 17.6% year over year to $1.4 billion while the gross margin fell 90 basis points to 6.5%. SG&A expenses rose 2.6% year over year to $943 million.
Archer Daniels reported a segmental operating profit of $1.1 billion, down 16% from the year-ago quarter.
The company has a trailing four-quarter return on invested capital of 8.3%, on an adjusted basis.
ADM’s Segmental Operating Profit
The segment operating profit for Ag Services & Oilseeds plunged 32% year over year to $644 million. The Ag Services subsegment’s operating profit rose 19%, owing to increased origination volumes and margins in North America, backed by improved river conditions. Gains from positive timing impacts, and increased destination marketing volumes and margins in Global Trade acted as positives.
The Crushing subsegment’s operating profit dropped 46% year over year, as higher industry run rates, increased manufacturing costs, and biofuel and trade policy uncertainty led to lower executed crush margins in North America, partly offset by higher margins and volumes in EMEA. The quarter had $52 million of insurance proceeds for part settlement of the Decatur East and West claim.
The Refined Products & Other subsegment’s operating profit declined 57%, as biofuel and trade policy uncertainty, pre-treatment capacity and increased imports of used cooking oil hurt margins in Europe and North America. Weak demand from food customers in North America negatively affected refining margins year over year. In the reported quarter, there were nearly $50 million of net negative mark-to-market timing effects against approximately $5 million of net positive impacts in the year-ago quarter. Equity earnings from ADM’s investment in Wilmar were about 20% lower year over year.
The Carbohydrate Solutions segment’s operating profit rose 3% year over year to $319 million. The Starches and Sweeteners sub-segment fell 3% year over year as increased volumes and margins in North America were offset by reduced co-product values and margins in EMEA. The current quarter comprised $37 million of insurance proceeds with respect to the partial settlement of the Decatur East and West insurance claim. In the Vantage Corn Processing subsegment, operating profit rose on increased ethanol export volumes and improved ethanol margins.
The Nutrition segment reported an adjusted operating profit of $88 million against an operating loss of $10 million in the year-ago quarter. The Human Nutrition subsegment’s operating profit was $62 million against a loss of $25 million in the prior-year quarter. Results benefited from the lapping of non-recurring adverse impacts from the prior year, increased volumes and improved mix, and robust performance by recent M&A, partly offset by higher costs. In the Animal Nutrition subsegment, operating profit was $26 million, up year over year, as cost-optimization actions and lower input costs aided higher margins.
Archer Daniels’ Other Financials
This Zacks Rank #1 (Strong Buy) company ended the quarter with cash and cash equivalents of $611 million; long-term debt, including current maturities, of $8.3 billion; and shareholders’ equity of $22.2 billion. As of Dec. 31, 2024, ADM provided $2.8 billion in cash for operating activities.
The company repurchased shares worth $2.3 billion and cash dividends of $985 million during 2024. Given a balanced approach to capital allocation, management has announced a 2% hike in the quarterly dividend. The company’s board has declared a cash dividend of 51 cents per share, up from 50 cents per share. This is payable March 11, 2025 to shareholders of record as on Feb. 18, 2025. This is the company’s 93rd straight year of uninterrupted dividends.
ADM’s targeted actions are likely to produce $500-$750 million cost savings in the next three-five years. It anticipates a targeted workforce reduction of nearly 600-700 roles globally this year. For 2025, management envisions adjusted earnings per share to be in the band of $4-$4.75, indicating soft market fundamentals and ongoing biofuel and trade policy uncertainty. ADM posted adjusted earnings of $4.74 a share in 2024.
We note that shares of ADM have lost 2.9% in the past three months against the industry’s 1% growth.
Other Stocks to Consider in Consumer Staples Space
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings per share (EPS) indicates growth of 24.5% and 66.8%, respectively, from the prior-year levels.
United Natural Foods (UNFI - Free Report) , a key distributor of natural, organic and specialty food and non-food products, presently flaunts a Zacks Rank of 1. The consensus estimate for United Natural Foods’ current financial-year sales and EPS indicates growth of 0.3% and 442.9%, respectively, from the prior-year levels.
UNFI has a trailing four-quarter average earnings surprise of 553.1%.
McCormick & Company (MKC - Free Report) , manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2 (Buy). MKC has a trailing four-quarter average earnings surprise of 13.8%.
The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 2.3% and 6.4%, respectively, from the year-ago figures.
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ADM Q4 Earnings Beat, Ag Services & Oilseeds Unit Hurts Revenues
Archer Daniels Midland Company (ADM - Free Report) posted mixed fourth-quarter 2024 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed. Both metrics declined on a year-over-year basis.
Adjusted earnings of $1.14 per share surpassed the Zacks Consensus Estimate of $1.07. However, the figure decreased from earnings of $1.36 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.17 per share, up 10.4% from the year-ago quarter’s $1.06.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Insight Into ADM’s Q4 Performance
Revenues fell 6.5% year over year to $21.5 billion and lagged the consensus estimate of $21.9 billion. The top line was hurt by lower revenues at its Ag Services & Oilseeds unit.
Archer Daniels Midland Company Price, Consensus and EPS Surprise
Archer Daniels Midland Company price-consensus-eps-surprise-chart | Archer Daniels Midland Company Quote
Segment-wise, revenues for Ag Services & Oilseeds fell 8.6% year over year to $16.9 billion, while Carbohydrate Solutions’ revenues increased 7.7% year over year to $2.8 billion. Nutrition’s revenues grew 5.9% year over year to $1.8 billion. The Zacks Consensus Estimate for the segments’ revenues was pegged $17.2 billion, $2.4 billion and $1.7 billion, respectively.
The gross profit decreased 17.6% year over year to $1.4 billion while the gross margin fell 90 basis points to 6.5%. SG&A expenses rose 2.6% year over year to $943 million.
Archer Daniels reported a segmental operating profit of $1.1 billion, down 16% from the year-ago quarter.
The company has a trailing four-quarter return on invested capital of 8.3%, on an adjusted basis.
ADM’s Segmental Operating Profit
The segment operating profit for Ag Services & Oilseeds plunged 32% year over year to $644 million. The Ag Services subsegment’s operating profit rose 19%, owing to increased origination volumes and margins in North America, backed by improved river conditions. Gains from positive timing impacts, and increased destination marketing volumes and margins in Global Trade acted as positives.
The Crushing subsegment’s operating profit dropped 46% year over year, as higher industry run rates, increased manufacturing costs, and biofuel and trade policy uncertainty led to lower executed crush margins in North America, partly offset by higher margins and volumes in EMEA. The quarter had $52 million of insurance proceeds for part settlement of the Decatur East and West claim.
The Refined Products & Other subsegment’s operating profit declined 57%, as biofuel and trade policy uncertainty, pre-treatment capacity and increased imports of used cooking oil hurt margins in Europe and North America. Weak demand from food customers in North America negatively affected refining margins year over year. In the reported quarter, there were nearly $50 million of net negative mark-to-market timing effects against approximately $5 million of net positive impacts in the year-ago quarter. Equity earnings from ADM’s investment in Wilmar were about 20% lower year over year.
The Carbohydrate Solutions segment’s operating profit rose 3% year over year to $319 million. The Starches and Sweeteners sub-segment fell 3% year over year as increased volumes and margins in North America were offset by reduced co-product values and margins in EMEA. The current quarter comprised $37 million of insurance proceeds with respect to the partial settlement of the Decatur East and West insurance claim. In the Vantage Corn Processing subsegment, operating profit rose on increased ethanol export volumes and improved ethanol margins.
The Nutrition segment reported an adjusted operating profit of $88 million against an operating loss of $10 million in the year-ago quarter. The Human Nutrition subsegment’s operating profit was $62 million against a loss of $25 million in the prior-year quarter. Results benefited from the lapping of non-recurring adverse impacts from the prior year, increased volumes and improved mix, and robust performance by recent M&A, partly offset by higher costs. In the Animal Nutrition subsegment, operating profit was $26 million, up year over year, as cost-optimization actions and lower input costs aided higher margins.
Archer Daniels’ Other Financials
This Zacks Rank #1 (Strong Buy) company ended the quarter with cash and cash equivalents of $611 million; long-term debt, including current maturities, of $8.3 billion; and shareholders’ equity of $22.2 billion. As of Dec. 31, 2024, ADM provided $2.8 billion in cash for operating activities.
The company repurchased shares worth $2.3 billion and cash dividends of $985 million during 2024. Given a balanced approach to capital allocation, management has announced a 2% hike in the quarterly dividend. The company’s board has declared a cash dividend of 51 cents per share, up from 50 cents per share. This is payable March 11, 2025 to shareholders of record as on Feb. 18, 2025. This is the company’s 93rd straight year of uninterrupted dividends.
ADM’s targeted actions are likely to produce $500-$750 million cost savings in the next three-five years. It anticipates a targeted workforce reduction of nearly 600-700 roles globally this year. For 2025, management envisions adjusted earnings per share to be in the band of $4-$4.75, indicating soft market fundamentals and ongoing biofuel and trade policy uncertainty. ADM posted adjusted earnings of $4.74 a share in 2024.
We note that shares of ADM have lost 2.9% in the past three months against the industry’s 1% growth.
Other Stocks to Consider in Consumer Staples Space
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter average earnings surprise of 144.5%. FRPT currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings per share (EPS) indicates growth of 24.5% and 66.8%, respectively, from the prior-year levels.
United Natural Foods (UNFI - Free Report) , a key distributor of natural, organic and specialty food and non-food products, presently flaunts a Zacks Rank of 1. The consensus estimate for United Natural Foods’ current financial-year sales and EPS indicates growth of 0.3% and 442.9%, respectively, from the prior-year levels.
UNFI has a trailing four-quarter average earnings surprise of 553.1%.
McCormick & Company (MKC - Free Report) , manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2 (Buy). MKC has a trailing four-quarter average earnings surprise of 13.8%.
The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 2.3% and 6.4%, respectively, from the year-ago figures.