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US commodities trader Archer Daniels Midland is slashing up to 700 jobs globally as part of a cost-cutting drive amid the growing threat of a worldwide trade war.
The Chicago-based agricultural commodities group, which has been embroiled in an accounting scandal, also on Tuesday reported a 48 per cent drop in earnings to $1.8bn last year, its second consecutive annual fall in profits.
It announced the job cuts in an effort to make $500mn to $750mn in savings over the next three to five years as agribusinesses suffer because of the plunge in corn, soyabean and wheat prices.
“We are executing targeted actions to navigate market volatility and simplify our portfolio, ensuring that ADM remains well-positioned for sustainable growth in the future,” said chief executive Juan Luciano.
Adjusted earnings per share fell 32 per cent in 2024, coming in at $4.74. ADM attributed the declines to weaker market conditions and geopolitical uncertainty, including the potential impact of trade policy decisions.
Shares fell 2 per cent in premarket trading following the announcement of the results.
Corn, soyabean and wheat prices hit four-year lows in 2024, driven by ballooning global stocks that reduced margins for agribusinesses such as ADM and Cargill.
They typically profit from price swings during market volatility but struggle in calmer times when arbitrage opportunities shrink.
The so-called ABCD of agricultural commodity traders — ADM, Bunge, Cargill and Louis Dreyfus — had enjoyed soaring profits in the wake of the Covid-19 pandemic and Russia’s full-scale invasion of Ukraine, which disrupted food supply chains.
In December, Cargill announced it was slashing 5 per cent of its 164,000-strong workforce as part of a sweeping restructuring effort to restore profit margins.
In January 2024, ADM announced a probe into accounting practices and placed finance chief Vikram Luthar on administrative leave. He has since resigned from the company.
The investigation revealed the company had overstated historical profits by up to 10 per cent in its nutrition business, touted by Luciano as a means to diversify away from trading and processing and shore up profits.
Sales from the company’s largest divisions, agricultural services and oilseeds, and carbohydrate solutions, to the nutrition business had not been recorded at market prices, according to ADM, which has since revised earnings back to 2018.
ADM reported adjusted earnings for the fourth quarter of $1.14 a share, a 16 per cent decrease compared with the same period in 2023, missing Wall Street’s expectations.
Revenue for 2024 fell 9 per cent to $85.5bn, largely driven by a significant drop in profits from the agricultural services and oilseeds segment, ADM said.
Looking ahead, it forecast adjusted earnings for 2025 to be in a range of between $4.00 and $4.75 a share, citing weaker market fundamentals and uncertainties in biofuel and trade policy.