Chicago, February 4 (Reuters) - Archer-Daniels-Midland, a global grains trader, announced on Tuesday that it is reducing costs and trimming staff to navigate a commodity downturn exacerbated by uncertainties surrounding U.S. biofuels policies and an impending trade war.
Facing challenges following an accounting scandal last year that led to two financial statement revisions and an ongoing federal probe, ADM reported its weakest performance in six years. The company forecast a potential third consecutive yearly earnings decline in 2025.
In an effort to streamline operations, ADM is cutting up to 700 jobs and aiming to reduce costs by up to $750 million over the next three to five years, aligning with similar strategies adopted by competitors in the agribusiness sector.
CEO Juan Luciano expressed uncertainty regarding the impact of President Donald Trump's tariff directives on Canada, Mexico, and China. Luciano highlighted the unpredictable nature of global trade conditions and potential ramifications on ADM's trading business.
Luciano mentioned the advantages of tariffs imposed by the U.S. government, but emphasized concerns about retaliatory measures and their effects on the industry. He noted that ADM is positioned to potentially benefit from trade disruptions due to its presence on a select list of grain-trading companies equipped to navigate such challenges.
In response to China reducing its soybean purchases from the U.S. in 2018, ADM leveraged its Brazilian supply chain to fulfill market demands, showcasing its global grain origination and distribution capabilities.
ADM, along with other crop processors, anticipates regulatory clarity from the Trump administration on tax credits for U.S. biofuels producers, which could enhance margins for oilseed crushing and biodiesel production. ADM, a pioneer in ethanol production and a leading U.S. biofuels producer, supplies biofuel manufacturers, including Marathon, through its substantial corn and soybean processing facilities.