CHICAGO, ILLINOIS, US — Executives of ADM expected a challenging fiscal year, and the first quarter, which saw low margins and downtime at a Decatur, Illinois, US, facility, met expectations.

Earnings of $729 million, or $1.42 per share on the common stock, for the quarter ended March 31 marked a 38% decline from $1.17 billion, or $2.12 per share, in the previous year’s first quarter. Adjusted segment operating profit of $1.32 billion was down 24% from $1.72 billion. Lower pricing and execution margins largely reflected the impact of lower crush margins and origination margins. Revenues dropped 9% to $21.85 billion from $24.07 billion.

“In a year where the buildup of grain and oilseed supply is expected to create pressure margins, our teams are proactively taking action to manage through the cycle, driving structural earnings ROIC (return on invested capital) and cash flow generation,” said Juan R. Luciano, chief executive officer and president, in an April 30 earnings call. “Our strong performance and disciplined management of our balance sheet continue to allow us to invest in our business and return cash to shareholders.”

On April 30, ADM’s stock on the New York Stock Exchange closed at $58.66 per share, which was down 3.4% from an April 29 close of $60.69.

In Ag Services and Oilseeds, adjusted operating profit fell 29% to $864 million from $1.21 billion. In the crushing subsegment, increased imports of used cooking oil and anticipated large South American supplies negatively impacted North American soy crush margins. In agricultural services, more stable trade flows led to lower global trade and risk management results. In refined products and other, increased imports of used cooking oil negatively impacted refining margins in North America.

“During the first quarter, the team executed on a strong forward book supported by meal demand, leading to executed soy crush margins of approximately $50 per (tonne),” said Ismael Roig, senior vice president and interim chief financial officer. “As we look today, we see that the forward curves reflect the assumption of ample South American supplies and the return of Argentinian production, specifically in Q2 and Q3.”

In Carbohydrate Solutions, adjusted operating profit declined 11% to $248 million from $279 million. Within starches and sweeteners, lower domestic ethanol margins offset strong margins. In Vantage Corn Processing, results improved as demand for sustainably certified exports of ethanol supported volumes and higher margins.

“In Carbohydrate Solutions, we anticipate the second quarter to be higher versus the prior year, driven by solid demand and margins in North American starches and sweeteners, partially set by moderating margins in wheat milling and international corn milling after elevated results in the prior year period,” Roig said. “We anticipate solid demand for ethanol, both domestically and in the export markets, similar to the prior year.”

In Nutrition, adjusted operating profit dropped 39% to $84 million from $138 million. Human nutrition fell 45% to $76 million.

“The team is focused on actions across all areas of planned recovery (in Nutrition), and we've seen expected sequential improvement coming out of the fourth quarter,” Luciano said. “The impact of these actions will accelerate in the back half of the year “

Impacts related to unplanned downtime in the facility and normalizing texturant markets negatively impacted margins. An explosion on Sept. 10, 2023, at the ADM processing plant in Decatur injured several employees.

Luciano said the Decatur facility situation will be a headwind throughout the fiscal year.

“I cannot provide any more details or granularity on that as we’re going through all the projects,” he said.