Shares of Archer-Daniels-Midland (ADM 0.72%) were moving lower Tuesday after the agricultural giant posted disappointing results in its fourth-quarter earnings report.
As of 10:37 a.m. ET, the stock was down 2.8% on the news.
Image source: Getty Images.
ADM comes up short
Tracking with big food peers such as ConAgra, ADM came up short in the quarter, blaming softer market conditions. Revenue in the quarter fell 6.5% to $21.5 billion, which missed estimates at $22.77 billion.
In its processing business, which includes oilseeds and corn, volume rose 1.5% to 13.8 million metric tons. Revenue from ag services and oilseeds, its biggest segment, fell 9% to $16.9 billion.
As a commodity-based business, ADM is highly dependent on market prices, and its results can swing based on factors outside its control. ADM has narrow gross margins because of the nature of its business, and gross profit fell 22% to $1.36 billion. Meanwhile, gross margin declined from 7.6% to 6.3%.
That led adjusted earnings per share to fall from $1.36 to $1.14, slightly below the consensus at $1.15.
CEO Juan Luciano said, "With softer market conditions and policy uncertainty around the world going into 2025, we are focused on improving our operational performance, accelerating cost savings, and simplifying our portfolio." It also announced a plan to find cost savings of $500 million to $750 million, and it raised its dividend by 2%, a sign of its commitment to return capital to shareholders.
NYSE: ADM
Key Data Points
What's next for ADM
ADM's guidance was also underwhelming, though that's not a surprise given the market dynamics. For 2025, the company expects adjusted earnings per share of $4.00 to $4.75, which compared with the consensus at $4.67.
Tariffs could also make ADM's recovery more difficult, limiting exports to places such as China. With a dividend yield of 3.8%, ADM might have some appeal to income investors, but they'll have to be patient with a comeback.
