ADM Profit Beat and Guidance Raise Met a Falling Share Price

Archer-Daniels-Midland beat third-quarter profit expectations on Tuesday and raised its full-year outlook for a third straight quarter, yet its shares fell in early trading.

Archer-Daniels-Midland, known as ADM, buys, moves and processes corn, soybeans and other crops. It turns them into food, feed and fuel ingredients worldwide. The third quarter, ended September 30, tested whether biofuel-driven margins could lift the whole system.

Adjusted profit beat expectations, and reported profit surged

Adjusted earnings were $1.77 a share, the company reported. Adjusted EPS, earnings per share excluding specified one-time items, rose from $0.92. Adjusted net earnings were $858 million, up from $448 million.

Analysts expected $1.60 a share on average, according to LSEG data reported by Reuters. The beat was about 11 percent, a TickerGrove calculation.

Reported profit rose far faster than the adjusted measure. Net earnings attributable to ADM were $821 million, or $1.70 a share. A year earlier they were $108 million, or $0.22 a share.

The gap between the two profit measures was small. Adjustments totaled $37 million, or seven cents a share. Impairment, restructuring and settlement charges of $47 million after tax led them, partly offset by a tax benefit.

“ADM delivered strong third quarter results, with earnings up significantly from the prior year quarter and operating profit growth across all segments,” Chair and Chief Executive Juan Luciano said. He credited a constructive biofuels environment, ADM's North American footprint and team execution.

Revenue grew, but the largest segment missed a key forecast

Revenue was $22.34 billion, compared with $20.37 billion a year earlier. The increase was 9.6 percent, a TickerGrove calculation. Gross profit was $1.89 billion, up from $1.27 billion.

Total segment operating profit, profit from the three operating segments before corporate costs, was $1.38 billion. That was up 64 percent from $845 million. Earnings before income taxes were $997 million, up from $147 million.

Investors focused on the largest segment instead. Ag Services and Oilseeds profit more than doubled to $778 million. But it fell below the $842 million consensus forecast tracked by JPMorgan, according to Reuters. The shortfall was about eight percent, a TickerGrove calculation.

ADM shares fell 5.5 percent in early trading on November 3 to $71.60, Reuters reported. That reaction, not the headline beat, set the morning's tone.

Crushing carried the segment as biofuel margins widened

Inside Ag Services and Oilseeds, crushing did the heavy lifting. Crushing, pressing oilseeds into meal, oil and fuel feedstocks, earned $311 million. A year earlier it earned $13 million, so profit rose by $298 million.

The release credits a constructive North American biofuels margin environment. It ties that environment to the Renewable Volume Obligation policy, finalized in March. Global crush volumes rose 1.6 percent, and soybean meal demand stayed strong.

Refined Products and Other earned $218 million, up 82 percent, on favorable biodiesel margins. Ag Services earned $172 million, down nine percent, while Wilmar equity earnings rose 38 percent to $77 million.

The segment total included about $35 million of net positive mark-to-market and timing impacts. Mark-to-market means valuing inventories and contracts at current market prices. Refined Products contributed about $45 million of that gain, partly offset elsewhere in the segment.

Carbohydrate Solutions rose 40 percent; Nutrition barely grew

Carbohydrate Solutions earned $470 million, up 40 percent from $336 million. Vantage Corn Processors earned $146 million, up from $43 million. The release credits robust North American ethanol margins, policy incentives and strong exports.

Starches and Sweeteners earned $324 million, up 11 percent. Strong ethanol margins more than offset soft liquid sweetener margins and volumes. Wheat milling volumes stayed stable in a competitive pricing environment.

Nutrition earned $134 million, up three percent from $130 million. Animal Nutrition rose 21 percent to $41 million. Human Nutrition fell three percent to $93 million, on downtime, cost inflation and soft Biotics demand.

Cash generation told a quieter story over the first nine months. Operating cash flow was $1.79 billion, down from $5.77 billion. Before working capital, it was $3.0 billion, up from $2.1 billion. Adjusted EBITDA, a cash-earnings measure, was $1.53 billion for the quarter.

Guidance raised for a third straight quarter

For the full year, ADM announced adjusted EPS guidance of about $5.50 to $5.80 a share. The prior range was $5.15 to $5.60. These are company forecasts announced today, not reported results.

Reuters described the move as the third straight quarterly raise. The new midpoint sits about five percent above the old one, a TickerGrove calculation.

The company also expects fourth-quarter operating profit to improve year over year in all segments. Capital spending guidance fell to $1.2 billion to $1.3 billion. The prior range was $1.3 billion to $1.5 billion.

On the earnings call, Luciano said 2027 earnings will likely land near 2026 levels, plus or minus a little, according to Reuters. That is management commentary reported by Reuters, not announced company guidance.

What remains unknown

What remains unknown starts with the segment shortfall against the JPMorgan-tracked forecast. The release reports the $778 million result in full. It does not measure the result against analyst expectations or explain a gap to them.

It is also unknown whether biofuel margins hold at this strength. The release credits a March policy finalization and higher energy prices. Both sit outside ADM's control, and either can reverse.

The durability of crushing profit is unknown as well. A $311 million quarter against $13 million a year earlier is an exceptional comparison base. The release gives no run-rate for the business.

What to watch next

What to watch next is the fourth quarter against the announced full-year range. Adjusted EPS of about $5.50 to $5.80 a share is the first test. Year-to-date adjusted EPS stands at $4.33.

Watch Ag Services and Oilseeds against its own momentum as well as forecasts. Crushing margins and the biofuel policy backdrop will decide the repeat.

Watch, too, the capital plan and cash conversion. Spending is now guided lower, at $1.2 billion to $1.3 billion. Working capital absorbed cash over the first nine months and will shape the year-end print.