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Archer Daniels Midland Company ADM is slated to release fourth-quarter 2024 results on Feb. 4, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $21.9 billion, suggesting a decrease of 4.6% from the prior-year quarter.
The consensus estimate for earnings is pegged at $1.07 per share, which indicates a plunge of more than 21% from the year-ago quarter’s figure. Also, the metric has moved down by a penny in the past 30 days. ADM delivered a negative earnings surprise of 6.5% in the last reported quarter.
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Key Factors to Influence ADM’s Upcoming Results
One of the key factors contributing to Archer Daniels' struggles is the underperformance in its Ag Services & Oilseeds segment. This segment has been witnessing a significant decline in both revenues and adjusted operating profit. Operating profit for the Ag Services segment has been affected by weak farmer selling and increased logistics costs.
Also, the Crushing sub segment is expected to be impacted by high canola seed prices and weaker overall results, despite strong soybean crush margins in EMEA. Moreover, the Refined Products & Other sub segment is expected to be impacted by softness in North America, driven by increased imports of used cooking oil and higher pretreatment capacity, which is likely to result in lower refining and biodiesel margins. These factors are expected to have weighed on revenues in the to-be-reported quarter.
On the last reported quarter’s earnings call, management anticipates lower year-over-year segment operating profit in Ag Services & Oilseeds for the fourth quarter of 2024. The improved environment in Ag Services is likely to be more than offset by weak margins in Crushing and Refined Products & Other.
The Zacks Consensus Estimate for adjusted operating profit for Ag Services & Oilseeds is pegged at $630 million, including $168 million for Ag Services, $253 million for Crushing and $122 million for Refined Products and Other sub-segments. The consensus estimate for Ag Services & Oilseeds revenues is pegged at $17.2 billion.
However, ADM has been focused on optimizing the organizational and operational structure across the Human and Animal Nutrition. These are likely to produce cost benefits in the to-be-reported quarter. On the last reported quarter’s earnings call, management stated that it remains optimistic about the Nutrition segment, thanks to the cyclical improvement across its broader portfolio, flavors, health and wellness and animal nutrition. In Nutrition, management expects the fourth-quarter operating profit to be higher year over year.
The Zacks Consensus Estimate for operating profit for the Nutrition segment is pegged at $85 million, including $15.4 million for Animal Nutrition and $70 million for Human Nutrition sub-segments. The consensus estimate for Nutrition segment revenues is pegged at $1.7 billion.
ADM has been creating additional margin opportunities, opening channels to customers, advancing digital technologies in areas like farmer needs, extending Regen Act programs and partnerships, and growing its BioSolutions platform. It expects a major portion of its planned $500 million cost savings from the execution excellence to be generated by the end of this initial year of the program. The company has been seeing solid demand for meals and oil. Gains from these efforts and trends should be reflected in the company’s fourth-quarter 2024 results.