• Adjusted Earnings Per Share (EPS): $1.14 for Q4 2024; $4.74 for full year 2024.
• Total Segment Operating Profit: $1.1 billion for Q4 2024; $4.2 billion for full year 2024.
• Cash Flow from Operations: $3.3 billion before working capital changes for 2024.
• Adjusted Return on Invested Capital (ROIC): 8.3% trailing fourth quarter.
• AS&O Segment Operating Profit: $644 million for Q4 2024; $2.4 billion for full year 2024, down 32% and 40% respectively from prior year.
• Carbohydrate Solutions Segment Operating Profit: $1.4 billion for full year 2024, flat compared to prior year.
• Nutrition Segment Operating Profit: $88 million for Q4 2024; $386 million for full year 2024, down 10% from prior year.
• Equity Earnings from Wilmar: $336 million for full year 2024, up 11% from prior year.
• Capital Expenditures: $1.6 billion in 2024.
• Dividends and Share Repurchases: $3.3 billion returned to shareholders in 2024.
• Insurance Proceeds: $231 million total in 2024, with $133 million from reinsurance.

• Warning! GuruFocus has detected 4 Warning Sign with ADM.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Archer-Daniels Midland Co (NYSE:ADM) reported fourth quarter adjusted earnings per share of $1.14 and full year adjusted earnings per share of $4.74, aligning with the midpoint of their guidance.
• The company achieved strong crush volumes in canola and rapeseed, particularly in the LatAm region, and improved crush volumes in North American soy assets.
• ADM made significant progress in safety, with a more than 35% year-over-year reduction in Tier 1 and 2 process safety incidents.
• The company announced an increase in its quarterly dividend, marking the 93rd consecutive year of uninterrupted dividends.
• ADM has identified a pipeline of approximately $2 billion in portfolio opportunities, aiming to maximize value for shareholders through strategic simplification and potential divestitures.

Negative Points

• The operating landscape was challenging in the fourth quarter, with biofuel and trade policy uncertainty negatively impacting the crush environment.
• Soybean and canola crush execution margins were significantly lower compared to the prior year, with soybean margins approximately $10 per ton lower and canola margins $20 per ton lower.
• The Nutrition segment faced weaker consumer demand and ongoing headwinds from unplanned downtime at Decatur East, resulting in lower organic revenues.
• ADM anticipates a challenging first half of 2025, with market headwinds related to US biofuel policy uncertainty and higher global soybean stock levels.
• The company expects lower margins in its Ag Services and Oilseeds segment, with soybean crush execution margins projected to be down approximately $5 per ton at the midpoint compared to the prior year.

Q & A Highlights

Q: On the Nutrition segment, what drives the expected profit recovery, especially given the headwinds in Q1? A: Juan Luciano, Chairman and CEO, explained that Nutrition has a significant self-help story. The recovery is expected from three areas: the Decatur plant's return to operation, continued growth in flavors and biotics, and margin improvements in animal nutrition. The plant is expected to be back in Q2, which will naturally improve results. Flavors and biotics are growing well, and animal nutrition is improving margins steadily.

Q: How do you view vegetable and soybean oil demand, especially with the 45Q guidance and imported UCO not qualifying for tax credits? A: Juan Luciano noted that while the 45Q guidance is constructive, uncertainties remain. The team anticipates soybean oil share to increase, and UCO share to decrease. The industry is digesting extra capacity and policy uncertainties. As these clear, margins should improve, supported by strong livestock demand and global biofuel mandates.

Q: Can you explain the guidance cadence for Ag Services and Oilseeds, given the tough start in Q1? A: Juan Luciano stated that Q1 is challenging due to lower crush margins booked in Q4. However, improvements in manufacturing, destination marketing, and strong meal demand are expected to support recovery. Monish Patolawala, CFO, added that biofuel clarity should strengthen the second half, and the absence of negative take-or-pay impacts from last year will be positive.

Q: Does your guidance include any expected impact from tariffs, and how would tariffs affect your operations? A: Juan Luciano confirmed that the guidance does not include tariff impacts due to unpredictability. Tariffs could have a slightly positive effect, but retaliatory measures are a concern. The company is leveraging its global origination and marketing capabilities to navigate potential impacts.

Q: What is the impact of Argentina's recent export tax revision on your business, and how might this policy evolve after June? A: Juan Luciano explained that the policy's impact is unclear due to ongoing harvest and weather conditions. The policy requires exporters to bring dollars into Argentina sooner, which could affect financing. The full impact will be clearer in April when farmers assess their harvest.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.