ADM, an essential global agricultural supply chain manager and processor and human and animal nutrition provider that offers a broad portfolio of ingredients and solutions from nature, reported preliminary financial results for the quarter ended Sept. 30, 2024.

Year-to-date (YTD) cash flows from operating activities are expected to be $2.468 billion, with cash flows from operations before working capital of $2.341 billion, compared to cash flows from operating activities of $1.891 billion and cash flows from operations before working capital of $3.804 billion for the corresponding prior-year YTD period.

“Our third-quarter operating results were mixed in a challenging quarter for the business,” said Juan Luciano, chair of the board and chief executive officer.

“While Carbohydrate Solutions achieved strong results, our Ag Services & Oilseeds and Nutrition businesses delivered results below expectations, impacted by softer-than-expected market conditions and the pace of our planned improvement efforts. We are taking the necessary actions to improve performance and drive continued value creation,” he added.

ADM noted that results presented in this release are preliminary and unaudited estimates based on information currently available to the company.

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Wilmar

GAAP earnings include a reduction in the carrying value of the Wilmar equity investment to reflect the Singapore Exchange trading price as of the balance sheet date. The reduction resulted from a determination that declines in the valuation amount for the investment are impaired on an “other than temporary” basis as of the end of the quarter. This has resulted in a non-cash charge against GAAP earnings for the third quarter of 2024 of $461 million. ADM said it continues to evaluate trends in the trading price of its Wilmar equity investment and the potential for future charges that could result.

The following discussion summarizes preliminary earnings results for ADM’s three reportable segments – Ag Services & Oilseeds, Carbohydrate Solutions and Nutrition – and other and corporate earnings information, according to the Nov. 4 news release.

Ag Services & Oilseeds segment summary

Ag Services & Oilseeds segment operating profit was $480 million during the third quarter of 2024, down 43% compared to the prior-year quarter.

Operating profit for the Ag Services subsegment was 53% lower versus the prior-year quarter, primarily due to lower results in South America Origination, as slower farmer selling and higher logistics costs related to industry take-or-pay contracts led to lower margins. The prior-year quarter also included $48 million of insurance proceeds related to Hurricane Ida.

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The Crushing subsegment operating profit was 25% lower versus the prior-year quarter. Global soybean crush margins were higher, supported by strong margins in EMEA. However, higher canola seed prices due to less supply in Europe drove lower canola crush margins, leading to lower results.

During the quarter, there were approximately zero mark-to-market timing impacts versus approximately $100 million of positive impacts from the same period a year ago, totaling approximately $100 million of negative net impacts versus the prior year. The current quarter also included $24 million of insurance proceeds for the partial settlement of the Decatur East and West insurance claims related to incidents in 2023.

The Refined Products & Other (RPO) subsegment operating profit was 63% lower versus the prior-year quarter, primarily driven by lower results in North America as increased imports of used cooking oil and greater pretreatment capacity drove significantly lower refining and global biodiesel margins. During the quarter, there were negative mark-to-market timing impacts in RPO of approximately $20 million versus approximately $100 million of positive timing impacts in the prior year, totaling approximately $120 million of negative net impacts year over year.

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Equity earnings from the Wilmar equity investment were $62 million during the quarter, compared to $35 million in the prior-year quarter.

YTD in 2024, the Ag Services & Oilseeds segment delivered $1.803 billion in segment operating profit, lower versus the elevated prior year. Ample supplies out of South America created more balanced supply and demand conditions, leading to a lower-margin environment in the segment. Improved segment volumes and lower costs partially offset the impact from lower margins. Equity earnings from the Wilmar equity investment were 20% higher versus the comparable prior-year period.

Carbohydrate Solutions segment summary

Carbohydrate Solutions segment operating profit was $452 million for the third quarter of 2024, down 3% compared to the prior-year period.

The Starches & Sweeteners subsegment increased 13% versus the prior-year period, primarily driven by strong starches and sweeteners volumes and margins, which were supported by high utilization rates across the network. The current quarter also included $47 million of insurance proceeds for the partial settlement of the Decatur West insurance claims related to an incident that occurred in 2023.

In the Vantage Corn Processing subsegment, an operating loss of $3 million was lower compared to the prior-year period, driven by higher inventories and production and leading to a lower margin environment.

YTD in 2024, Carbohydrate Solutions segment operating profit of $1.057 billion was 1% lower than the prior-year period, as lower margins in the EMEA region and lower domestic ethanol margins were partially offset by improved volumes and lower costs.

Nutrition segment summary

Nutrition segment operating profit was $105 million for the third quarter of 2024, down 19% compared to the prior-year period.

Human Nutrition subsegment operating profit was $86 million, approximately 27% lower versus the prior-year period. Solid performance by recent Flavors M&A was more than offset primarily by lapping non-recurring benefits in Health & Wellness in the prior year, in addition to certain other costs, including costs associated with the closure of a joint venture. The current quarter also included $25 million of insurance proceeds for the partial settlement of the Decatur East insurance claims related to an incident that occurred in 2023.

In the Animal Nutrition subsegment, operating profit of $19 million was 58% higher compared to prior-year quarter as cost optimization efforts and lower input costs supported higher margins.

YTD in 2024, Nutrition segment operating profit of $298 million was 32% lower than the prior-year period, primarily driven by negative impacts related to unplanned downtime at Decatur East, lower texturants margins and higher costs in Human Nutrition.

Other and Corporate summary

For the third quarter, Other business operating loss was $17 million, down $63 million versus the prior year due to lower Captive insurance results from $112 million in claim settlements. Included in claim settlements were partial settlements of $96 million for the Decatur East and West insurance claims. ADM Investor Services results decreased on lower interest income.

YTD in 2024, Other business operating profit was $200 million, down $29 million versus the prior year due to lower Captive insurance results from $112 million in claim settlements, which included partial settlements of $96 million for the Decatur East and West insurance claims. ADM Investor Services results decreased on lower interest income.

In Corporate for the third quarter, unallocated corporate costs increased versus the prior year on $28 million in higher legal fees and $14 million in higher financing costs, partially offset by lower incentive compensation.

In Corporate for YTD 2024, unallocated corporate costs increased versus the prior year on higher global technology investments to support digital transformation efforts, $75 million in increased legal fees and $33 million in increased financing costs, partially offset by lower incentive compensation. Other Corporate was unfavorable compared to the prior-year period due to investment valuation losses partially offset by foreign currency gains.

Outlook

The company is lowering its previously provided earnings per share guidance for the full year. ADM now expects adjusted earnings per share in the range of $4.50-5.00 for full year 2024, based on trends in its performance to date, legislative and regulatory policy uncertainties and ongoing headwinds from slower market demand and internal operational challenges.