Archer-Daniels-Midland (ADM) Q4 2025 earnings review
Core Profits Collapse, But Guidance Bets on a Policy Pivot
ADM limped to the finish line of a challenging 2025. Q4 Adjusted EPS fell 24% YoY to $0.87, while revenue contracted nearly 14%. The core Ag Services & Oilseeds (AS&O) segment was battered, with operating profit down 31% and the Crushing sub-segment collapsing 69% due to weak margins. Despite the dismal execution in Q4, management issued FY26 guidance ($3.60–$4.25) that implies a 14% earnings rebound, banking heavily on 'biofuel policy clarity' and $500M+ in cost savings to reverse the tide.
🐂 Bull Case
Management's FY26 Adjusted EPS guidance of $3.60–$4.25 (midpoint $3.93) implies significant acceleration (+14% YoY) from FY25's $3.43. They expect a 'constructive operating environment' driven by U.S. biofuel policy clarity.
The 'self-help' agenda is ramping up. ADM is targeting $500–$750 million in aggregate cost savings over the next 3-5 years, which protects the bottom line even if the macro recovery is sluggish.
🐻 Bear Case
The Crushing sub-segment—historically a profit engine—saw profits vaporize, falling 69% YoY to just $66M. Without a rapid improvement in global crush margins, the FY26 recovery targets look overly optimistic.
Sales dropped ~14% YoY in Q4, a significant deterioration compared to the flat/positive trends seen earlier in the year. Demand weakness is spreading to Carbohydrate Solutions (Starches & Sweeteners down 16%).
⚖️ Verdict: 🔴
Bearish. The gap between current performance (Crushing profit -69%) and future promises is too wide. While the 2.7% dividend yield (Aristocrat status) offers support, the thesis relies entirely on government policy changes that have repeatedly been delayed.
Key Themes
Crushing Profit Evaporation
The deterioration in the core Crushing business is accelerating. Operating profit fell from $212M in 24Q4 to just $66M in 25Q4 (-69%). Management cites 'weaker crush margins in both North and South America.' This is a structural profitability shock, not just a volume issue, as processed volumes actually increased marginally.
Starches & Sweeteners Weakness
Carbohydrate Solutions is no longer the stabilizer it was in early 2025. Starches & Sweeteners profit dropped 16% YoY to $256M. The driver is 'lower global demand' and high corn costs in EMEA due to crop quality issues. If consumer demand for packaged goods remains soft, this segment will drag on FY26 results.
The 'Self-Help' Pivot
With organic growth stalling, ADM is pivoting hard to cost cuts. The plan targets $500–$750 million in run-rate savings. While necessary, relying on cost cuts (rather than margin expansion) to hit guidance suggests low confidence in the underlying commodity cycle.
Nutrition Stagnation
Despite a narrative of recovery throughout 2025, Nutrition operating profit fell 11% YoY in Q4 to $78M. While Flavors showed strength, the segment was hit by the absence of prior-year insurance proceeds ($46M in 24Q4 vs $0 in 25Q4). Organic operational improvement is invisible in the headline numbers.
Biofuel Policy Catalyst
The Bull case for FY26 rests almost entirely on Washington. Management explicitly ties the upper end of guidance ($4.25 EPS) to 'U.S. biofuel policy clarity' driving crush margin expansion. If the 45Z tax credit or RVO mandates are favorable, the depressed AS&O segment could snap back violently.
Other KPIs
Decelerating. Down 31% YoY. This is the lowest quarterly result for the segment in FY25, driven by the collapse in Crushing and flat-to-down results in Refined Products.
Decelerating. Dropped from 8.3% in FY24. The return on capital is compressing as earnings fall faster than the invested capital base, signaling deteriorating capital efficiency.
Stable/Accelerating. While earnings fell, operating cash flow nearly doubled from $2.8B in FY24 (which was impacted by one-offs). However, purely operational cash flow before working capital dropped to $2.7B from $3.3B, reflecting lower core profitability.
Guidance
Accelerating. The midpoint ($3.93) implies a 14.5% increase over FY25's $3.43. This forecast relies on a 'constructive operating environment' and cost savings, reversing the negative trend of 2025.
Stable. Consistent with the $1.25B spent in FY25 and lower than FY24 ($1.6B). Management is keeping a tight lid on capex to preserve free cash flow during the margin downturn.
Accelerating. Assumes year-over-year growth driven by 'improvement in global trade flows' and potential crush margin outcomes. This is a sharp pivot from the -34% decline seen in FY25.
Key Questions
Biofuel Policy Contingency
Your FY26 guidance upper bound relies on 'policy clarity.' If the 45Z credit or RVO mandates are delayed further into late 2026, what is the downside floor for EPS? Is the $3.60 low end protected without policy help?
Crush Margin Visibility
Crushing profit fell 69% in Q4 despite higher volumes. With global soy supplies ample and Argentine competition rising, what specific market signals give you confidence that crush margins will expand in 2026 rather than remain compressed?
Nutrition's Organic Growth
Nutrition profit was down 11% in Q4. Stripping out the noise from insurance proceeds, what is the organic growth rate of the Flavors and Animal Nutrition businesses, and when will the segment return to consistent quarterly YoY growth?
Starches & Sweeteners Demand
Volumes and margins declined in Starches & Sweeteners due to 'weaker food demand.' Is this a temporary destocking issue, or are you seeing a structural shift in consumer consumption of packaged foods impacting volumes for 2026?