ADM announces layoffs after quarterly profits fall due to weak crushing margins

Grains merchant Archer-Daniels-Midland reported a drop in fourth-quarter profit on Tuesday, pressured by weak oilseed crush margins and uncertainty over U.S. biofuel policy, and said it would be laying off up to 700 employees globally this year.

ADM, a Chicago-based company, said that it would aim to reduce costs by $500 to $750 millions over the next 3 to 5 years through job cuts as well as lower raw material and manufacturing costs.

In premarket trading, shares of the company fell 1.6%.

Last week, it was reported that the grain traders would start to lay off staff in an effort to reduce costs globally as low crop prices were affecting the company's profits.

ADM's profits have been eroded due to a slowing demand and an oversupply of staple crops such as corn and soybeans. It buys, ships, processes, and sells these crops around the globe. Prices for both crops fell to four-year lows by 2024, as global stocks of food staples soared.

The company warned that the commodities cycle was likely to be challenging this year, and stated it would focus on cost control in order to survive.

ADM expects adjusted earnings per share to range between $4 and $4.75 in 2025. Analysts expected $4.67 on average per share.

ADM's largest segment, the agricultural services and oilseeds, saw its operating profit fall 32% compared to a year ago. This was due to lower North American oilseed crushing prices and uncertainties surrounding biofuel policies.

The operating profit of the carbohydrate solutions unit rose by 3%, and nutrition turned a profit.

According to data compiled and analyzed by LSEG, the company reported an adjusted profit per share of $1.14 for the three-month period ended December 31, down 16% compared to $1.36 a yeaear earlier. This compares with the analysts' average estimate per share of $1.15. Reporting by Karl Plume and Vallari Srivastava from Chicago; editing by Shreya Biwas and Emelia S. Sithole-Matarise

(source: Reuters)