ADM Q2 Earnings Beat Estimates, Segment-Wise Declines Act as Headwinds

Core Insights - Archer Daniels Midland Company (ADM) reported second-quarter 2025 results with both revenue and earnings exceeding Zacks Consensus Estimates, although both metrics showed a year-over-year decline [1][2]. Financial Performance - Adjusted earnings per share (EPS) were 93 cents, surpassing the Zacks Consensus Estimate of 88 cents, but down from $1.03 in the same quarter last year [2][10]. - Reported earnings were 45 cents per share, a decrease from 98 cents year-over-year [2]. - Revenues fell 4.9% year-over-year to $21.2 billion, beating the consensus estimate of $21.1 billion [2][10]. Segment Performance - Ag Services & Oilseeds revenues decreased 6.1% year-over-year to $16.3 billion [3]. - Carbohydrate Solutions revenues declined 3.5% year-over-year to $2.79 billion [3]. - Nutrition segment revenues increased 4.5% year-over-year to $1.99 billion [3]. - Other Business revenues fell 0.9% to $112 million from $113 million in the prior-year period [3]. Profitability Metrics - Gross profit decreased 1.9% year-over-year to $1.37 billion, with a gross margin of 6.5% [4]. - Selling, general and administrative expenses rose slightly to $911 million from $907 million in the year-ago quarter [4]. - Adjusted segmental operating profit was $830 million, down 10.3% from the previous year [4]. Operating Profit by Segment - Ag Services & Oilseeds adjusted operating profit dropped 17% year-over-year to $379 million, affected by lower volumes and margins due to trade policy uncertainty and weak commodity prices [5]. - Crushing subsegment's operating profit plummeted 75% year-over-year due to lower vegetable oil demand [6]. - Refined Products and Other subsegment saw a 14% increase in operating profit, although biodiesel margins remained under pressure [7]. Cash Flow and Financial Position - As of June 30, 2025, ADM had cash and cash equivalents of $1.06 billion and long-term debt of $8.37 billion [15]. - The company generated $3.96 billion in cash from operating activities and paid out dividends of $495 million in the reported quarter [15]. Guidance and Market Performance - For 2025, management tightened its adjusted EPS guidance to $4.00, with expectations leaning towards the lower end due to anticipated margin benefits [16]. - ADM shares have gained 12.5% over the past three months, slightly outperforming the industry growth of 12.2% [16].