CHICAGO — ADM’s operating profit fell 38% in the first quarter ended March 31, which included a 52% decrease in its Ag Services and Oilseeds segment.

Chicago-based ADM still reaffirmed its full-year guidance of adjusted earnings per share in the range of $4 to $4.75 but expects to deliver at the lower end of the range. ADM’s stock on the New York Stock Exchange closed at $48.32 per share on May 6, up from a close of $47.50 per share on May 5.

“ADM’s first-quarter results were aligned with our outlook and market expectations and our business operated well in a dynamic external environment,” said Juan Luciano, chief executive officer, in a May 6 earnings call. “With uncertainty related to global trade and regulatory policy continuing to have an impact on the business, we were able to drive positive momentum in focused areas.”

Net earnings of $295 million, or 61¢ per share on the common stock, were down from $729 million, or $1.42 per share, in the previous year’s first quarter. Revenues fell 8% to $20.18 billion from $21.85 billion. Total segment operating profit was $747 million, down from $1.20 billion.

ADM expects to have a plant in Decatur, Ill., at full run rate by the end of the second quarter, Luciano said. A dust explosion at the plant on Sept. 10, 2023, affected soybean protein production negatively.

Higher Soybean Stock Levels

Within the Ag Services and Oilseeds segment, operating profit fell 52% to $412 million from $864 million.

“As we expected, market disruptions related to biofuel policy uncertainty negatively impacted biodiesel and renewable diesel margins and US vegetable oil demand,” said Monish Patolawala, chief financial officer for ADM. “We also experienced higher global soybean stock levels and an increase in Argentinian crush rates, which pressured global soybean meal value. Additionally, trade policy uncertainty, particularly with Canada and China, created volatility throughout the quarter for canola meal and oil. Taken together, these factors resulted in significantly lower meal and vegetable oil values, pulling down margins across our businesses.”

Within the segment, crushing operating profit dropped 85% to $47 million from $313 million, driven by lower margins due to increased industry capacity, competitive meal exports from Argentina, higher manufacturing costs, and lower vegetable oil demand due to biofuel and trade policy uncertainty. About $4 million of net positive mark-to-market timing impacts compared to about $40 million in the previous year’s first quarter.

“Consistent with the previously provided outlook, both global soybean and canola crush execution margins was significantly lower than the prior-year quarter,” Patolawala said. “Global executed crush margins were approximately $13 per ton lower in soybeans compared to the prior-year quarter and approximately $40 per ton lower in canola.”

In ag services, operating profit fell 31% to $159 million from $232 million. A decrease in volumes and margins, primarily due to tariff and trade policy uncertainty, drove the decrease. Negative mark-to-market timing impacts and the impact of certain export duties also were a factor in the decrease. Higher destination marketing volumes and related margins partially offset the negative impacts.

In refined products and other, operating profit decreased 21% to $134 million from $170 million. Equity earnings on ADM’s investment In Wilmar were down 52% to $72 million from $149 million, Patolawala said.

In ADM’s Carbohydrate Solutions segment, operating profit declined 3% to $240 million from $248 million.

Monitoring Consumer Demand

Within the segment, starches and sweeteners operating profit decreased 21% to $207 million from $261 million due to lower North American starch margins; lower Europe, Middle East and Africa (EMEA) volumes and margins in starches and sweeteners; and higher manufacturing costs. Operating profit within Vantage Corn Processors was $33 million, which compared to an operating loss of $13 million in the previous year’s first quarter, behind higher ethanol volumes and improved margin.

“We have seen some signs of weakening customer demand, particularly in carb solutions and have lowered our volume expectations for select markets and products,” Patolawala said. “While we are not embedding any significant macroeconomic slowdown in our guide, we are actively monitoring consumer demand.”

In ADM’s Nutrition segment, operating profit increased 13% to $95 million from $84 million, drive by flavors, animal nutrition excluding pet and timing-related incentive compensation adjustments.

Within the segment, human nutrition operating profit slipped to $75 million from $76 million. In flavors, operating profit increased, primarily driven by higher volumes and margins in North America and EMEA. In specialty ingredients, operating profit declined due to lower margins. In health and wellness, operating profit declined due to certain negative valuation adjustments. In animal nutrition, operating profit more than doubled to $20 million from $8 million due to improved market conditions.