ADM sees challenges that will continue in 2025, with a focus on cost control
ARCH PHOTO: A general view of Archer Daniels Midland headquarters in Decatur
ADM
-2.03%
CHICAGO (Reuters) - Global grain trader Archer-Daniels-Midland said on Tuesday the company was focused on controlling costs as a "challenging" commodity cycle that eroded profits is expected to continue in 2025.
Weak crop prices and uncertainty over biofuel regulation are among the headwinds for the company, while a potential tariff battle between the US and China could disrupt already global trade flows. from January, the company said in an earnings conference call.
ADM and its agribusiness rivals, including Bunge and Cargill, saw their profits erode as prices for commodity crops such as corn and soybeans fell to four-year lows. years on tight supply, while inflation has overwhelmed demand.
Cargill said on Tuesday it plans to cut about 5% of its global workforce due to a drop in revenue.
"The global commodity landscape has continued to change. "Larger-than-expected supplies have caused raw material prices to fall more than expected," ADM CEO Juan Luciano said.
"We are also seeing the effects of inflation in parts of our business," he said, adding that some ADM customers have cut back on their spending.
Federal investigations into accounting irregularities at ADM have added to the pressure on the company, whose stock price has fallen more than 25% this year.
The company was forced to restate a total of 6 ½ years of financial data in March and November after discovering that sales between its food business and other core units were not properly recorded.
Last month, ADM lowered its earnings outlook for 2024, citing political uncertainty, weak demand and "internal operational challenges." It has not yet detailed its 2025 target. "It's too early in the year, there are too many unknowns, especially on the regulatory side, to make predictions for the year," Luciano said.
But he said potential disruptions to global trade resulting from a possible U.S.-China tariff battle could benefit ADM and the company has "scenario planning" to prepare for it.
"Normally what we see in these circumstances is that trade flows adjust. At the end of the day, there's still some demand around the world, it's just being met in a different way," Luciano said.
"It's in these situations that ADM's global footprint and global team typically shine."
ADM shares fell 2.2% by midday to $53.10.