Global grain trader Archer-Daniels-Midland (ADM) reported better-than-expected first-quarter 2024 profits, citing lower energy and manufacturing costs. However, the company warned of lower soy crushing margins and continued headwinds in its Nutrition unit, which has been the focus of government investigations.
ADM’s adjusted operating profit in its Ag Services and Oilseeds division, which includes soybean crushing and trading businesses, fell to $864 million, compared to $1.21 billion a year earlier. The company said higher soy crush volumes during the quarter helped partially offset lower crush margins, but executives warned that the unit’s second-quarter operating profit would be significantly lower compared to a year ago.
The company’s Carbohydrate Solutions division, which houses its ethanol and sweeteners operations, also saw a decline in adjusted operating profit to $248 million, down from $279 million a year earlier.
In March, ADM corrected six years of financial data after an internal investigation found some sales between business units within the company were not recorded properly. The company confirmed that it had received grand jury subpoenas from the Department of Justice, which is investigating its accounting practices.
ADM’s Nutrition division, touted by executives as the future of the company, reported an adjusted operating profit of $84 million, down from $138 million in the prior year period. Luciano, the CEO, said the unit faced headwinds from its specialty ingredients business, the Decatur East processing plant being down due to an explosion, and lower texturant pricing.
Despite the challenges, ADM reaffirmed its previous guidance for 2024. The company reported adjusted earnings of $1.46 per share, beating the average analyst estimate of $1.36 per share. ADM’s shares were trading about 4.6% lower, below Wall Street’s main indexes.