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

Archer Daniels Midland Company ADM posted second-quarter 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, both metrics declined on a year-over-year basis.

Insight Into ADM’s Q2 Performance

Adjusted earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 88 cents. However, the figure decreased from earnings of $1.03 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were 45 cents per share, down from 98 cents in the year-ago quarter.

Revenues fell 4.9% year over year to $21.2 billion and beat the consensus estimate of $21.1 billion. The top line was hurt by lower revenues across most of its segments.

Archer Daniels Midland Company Price, Consensus and EPS Surprise

 

Archer Daniels Midland Company price-consensus-eps-surprise-chart | Archer Daniels Midland Company Quote

Segment-wise, revenues for Ag Services & Oilseeds fell 6.1% year over year to $16.3 billion, while Carbohydrate Solutions’ revenues decreased 3.5% year over year to $2.79 billion. Nutrition’s revenues rose 4.5% year over year to $1.99 billion. The Zacks Consensus Estimate for the segments’ revenues was pegged at $16.1 billion, $2.87 billion and $1.92 billion, respectively. Revenues from Other Business fell 0.9% to $112 million from $113 million in the prior-year period.

The gross profit decreased 1.9% year over year to $1.37 billion, while the gross margin stood at 6.5%. Selling, general and administrative expenses rose slightly to $911 million from $907 million in the year-ago quarter.

Archer Daniels reported adjusted segmental operating profit of $830 million, down 10.3% from the year-ago quarter.

The company has a trailing four-quarter return on invested capital of 6.9% on an adjusted basis.

ADM’s Segmental Operating Profit

Adjusted operating profit for Ag Services & Oilseeds dropped 17% year over year to $379 million. The Ag Services subsegment’s operating profit fell 7% due to lower volumes and margins, led by trade policy uncertainty, weak commodity prices and slower farmer selling. Margins were also hurt by negative mark-to-market timing effects of about $10 million compared with $17 million of positive impacts in the year-ago quarter.

The Crushing subsegment’s operating profit plunged 75% year over year on lower vegetable oil demand, which was impacted by biofuel and trade policy uncertainty. There were about $21 million of net positive mark-to-market timing impacts in the quarter against $16 million of net negative impacts in the year-ago quarter.

The Refined Products and Other subsegment recorded a 14% increase in operating profit from the same quarter last year. However, biodiesel margins remained under pressure due to ongoing biofuel and trade policy uncertainty. Weaker demand for crop-based vegetable oils and expanded crush capacity weighed on refining margins.

The quarter benefited from approximately $28 million in net favorable mark-to-market timing effects, a significant improvement from about $91 million in net unfavorable impacts in the prior-year period. Equity earnings from the company’s investment in Wilmar increased by approximately 13% from the prior-year quarter.

ADM Stock Past 3-Month Performance

The Carbohydrate Solutions segment posted an operating profit of $337 million in the second quarter of 2025, reflecting a 6% decline from the year-ago period. Operating profit in the Starches & Sweeteners subsegment also fell 6% due to lower international volumes and margins, particularly in EMEA, wherein corn quality issues led to higher input costs. Global wheat milling margins and volumes improved, supported by strong demand from key customers. 

In North America, corn wet milling profits saw a slight uptick as higher liquid sweetener margins helped offset the impacts of softer starch volumes. The Vantage Corn Processors subsegment delivered relatively flat operating profit year over year, as volumes and margins remained steady.

The Nutrition segment reported an operating profit of $114 million in the second quarter of 2025, marking a 5% increase from the same period last year. Operating profit in the Human Nutrition subsegment declined 11% year over year. Within this segment, Flavors saw profit growth due to higher margins and a modest increase in volumes, particularly in North America.

However, Specialty Ingredients experienced a decline in profitability, impacted by weaker margins and challenges associated with the Decatur East plant. The Health & Wellness business also posted lower profits due to margin compression. Meanwhile, the Animal Nutrition subsegment posted an operating profit of $22 million, marking a 267% year-over-year upsurge, driven by cost optimization and better market conditions.

Archer Daniels’ Other Financials

The company ended the quarter with cash and cash equivalents of $1.06 billion, long-term debt, including current maturities, of $8.37 billion, and shareholders’ equity of $22.4 billion. As of June 30, 2025, ADM generated $3.96 billion in cash from operating activities. It paid out dividends of $495 million in the reported quarter.

For 2025, management tightened its adjusted earnings per share guidance to $4.00. However, the metric is expected to come at the lower end due to most margin benefits being realized in the fourth quarter and beyond.

We note that shares of this Zacks Rank #3 (Hold) company have gained 12.5% in the past three months as compared with the industry’s 12.2% growth.

Some Better-Ranked Bets

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Post Holdings POST, Nomad Foods Ltd. NOMD and Ingredion Incorporated INGR.

Post Holdings is a consumer-packaged goods holding company. POST presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Post Holdings’ current sales and earnings indicates growth of 2.7% and 7.3%, respectively, from the year-ago period’s reported figures. POST delivered a trailing four-quarter earnings surprise of 22.9%, on average.

Nomad Foods manufactures and distributes frozen foods. It currently has a Zacks Rank of 2 (Buy).

NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The consensus estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 8.6% and 10.4%, respectively, from the year-ago period’s reported figures.

Ingredion serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. It currently carries a Zacks Rank of 2. INGR delivered a trailing four-quarter average earnings surprise of 11.1%.

The consensus estimate for INGR’s current financial-year sales and earnings indicates growth of 1% and 6.8%, respectively, from the prior-year reported levels.

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This article originally published on Zacks Investment Research (zacks.com).

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