Archer Daniels Reports Mixed Q4 Segment Performance Amid Margin Pressures

Archer Daniels Midland Company (ADM) has released its fourth-quarter 2025 financial results, revealing a complex earnings landscape where adjusted earnings exceeded expectations while revenue fell short and key segment sales declined. The company’s adjusted earnings reached 87 cents per share, surpassing the Zacks Consensus Estimate of 83 cents, yet this performance masks underlying weakness across multiple business divisions that warrant closer examination.

Understanding ADM’s Earnings Beat Against Revenue Headwinds

On a reported basis, Archer Daniels delivered 94 cents per share in Q4 2025, compared to $1.17 in the year-ago quarter. While the adjusted earnings beat consensus expectations, the top-line performance disappointed investors. Revenues contracted 13.7% year-over-year to $18.6 billion, substantially lagging the consensus estimate of $22.3 billion. This divergence between earnings quality and revenue growth signals significant operational challenges within specific line segments of the business.

The gross profit fell 10.7% to $1.2 billion with a gross margin of 6.5%, while selling, general and administrative expenses improved to $893 million from $943 million in the prior-year period. The company’s trailing four-quarter return on invested capital stood at 6.3% on an adjusted basis, indicating ongoing pressure on capital efficiency.

Segment-by-Segment Operating Profit Analysis: Diverging Trends Across Business Lines

Archer Daniels’ adjusted segmental operating profit reached $821 million, declining 22% from the year-ago quarter. This decline reflects uneven performance across the company’s three primary business segments, each facing distinct market challenges.

Nutrition Segment: Modest Gains Amid Structural Headwinds

The Nutrition segment reported an operating profit of $78 million in Q4 2025, marking an 11% year-over-year decrease. This segment, which generated $1.8 billion in revenues (up 0.7% from the prior year), demonstrated relative stability compared to more turbulent divisions. Within the Human Nutrition subsegment, operating profit fell 10% due primarily to the absence of prior-year insurance proceeds. However, Flavors operating profit increased, driven by strong North American sales supplemented by European and Asia Pacific performance. Specialty Ingredients continued its recovery trajectory throughout the quarter, though Health & Wellness posted lower operating profit reflecting deliberate inventory normalization and cash flow optimization efforts. The Animal Nutrition subsegment’s operating profit declined 15%, largely attributable to localized volume softness and one-time items.

Carbohydrate Solutions Segment: Recovery Signs Amid Structural Decline

The Carbohydrate Solutions segment delivered operating profit of $299 million in the fourth quarter, reflecting a 6% decline from the year-ago period. Revenues fell 3.9% to $2.6 billion, only modestly underperforming the consensus estimate of $2.6 billion. The Starches & Sweeteners subsegment faced particular pressure, with operating profit declining 16% due to lower global demand that compressed both volumes and margins. Cost pressures intensified in EMEA regions, where elevated corn costs stemming from quality issues further impaired profitability. Results were notably impacted by comparison headwinds: the prior-year quarter benefited from $37 million in insurance proceeds related to the Decatur East and West claims, compared to only $4 million in Q4 2025 from the Decatur West claim.

A bright spot emerged from Vantage Corn Processors, whose operating profit surged 187% year-over-year, propelled by firm ethanol industry margins during October and November before seasonal softening in December. Strong export demand reduced industry inventories on a year-over-year basis, partially offsetting typical domestic seasonal declines.

Agricultural Services and Oilseed Segment: Sharp Deterioration Across Subsegments

The Ag Services & Oilseeds segment experienced the most severe performance deterioration, with adjusted operating profit plummeting 31% year-over-year to $444 million. Segment revenues fell 16.9% to $14 billion, substantially underperforming the consensus estimate of $17.7 billion and indicating substantial operational strain.

Within the Ag Services subsegment, operating profit declined 31%, driven primarily by lower soybean export activity from North America coupled with unfavorable mark-to-market impacts. This quarter recorded only $1 million in net negative mark-to-market impacts compared to $50 million in positive impacts in the prior-year period—a $49 million adverse swing.

The Crushing subsegment experienced even steeper deterioration, with operating profit plunging 69% as weaker crush margins in both North and South America substantially offset higher global crush volumes. Results were further pressured by approximately $20 million in net negative mark-to-market impacts during the quarter, compared to a neutral position in the prior-year period.

Refined Products and Other operating profit declined 2% from the prior year, with refining margins pressured by weaker food demand and softer fuel demand amid ongoing uncertainty regarding U.S. biofuel policy clarity. However, the quarter included approximately $22 million in net positive mark-to-market impacts compared with roughly $50 million in negative impacts in the prior-year period, which partially mitigated underlying margin deterioration. Notably, equity earnings from ADM’s Wilmar investment surged approximately 49% year-over-year, providing some offset to segment-level weakness.

Financial Position and Capital Allocation Strategy

Archer Daniels concluded the quarter with $1.02 billion in cash and cash equivalents against long-term debt of $7.6 billion, maintaining shareholders’ equity of $34.7 billion. For the full year 2025, the company generated $5.45 billion in operating cash flow while distributing $987 million in dividends.

Management announced a measured 2% increase in the quarterly dividend, with the board declaring a cash dividend of 52 cents per share, elevated from the prior 51 cents per share. This represents the company’s 94th consecutive year of uninterrupted dividend payments, underscoring commitment to shareholder returns despite current operational headwinds. The dividend is payable March 10, 2026, to shareholders of record as of February 17.

2026 Strategic Outlook and Segment Expectations

For 2026, Archer Daniels provided adjusted earnings per share guidance in the range of $3.60 to $4.25, reflecting management’s cautious optimism tempered by continued uncertainty. The lower end of this range assumes sustained deferral of U.S. biofuel policy clarity and largely flat crush margins, while the upper end incorporates assumptions of sustained crush margin expansion, manufacturing efficiency gains, and strengthening customer demand.

From a segment perspective, management expects year-over-year operating profit growth in Ag Services & Oilseeds, supported by improving global trade flows and potential crush margin recovery. The Carbohydrate Solutions segment is projected to deliver flat operating profit performance, as reduced starches and sweeteners volumes and pricing are anticipated to be offset by higher ethanol margins. The Nutrition segment is expected to continue delivering stronger organic growth and improved execution.

Capital expenditure guidance for 2026 ranges from $1.3 to $1.5 billion, reflecting continued investment in strategic priorities and operational efficiencies designed to enhance long-term competitiveness.

Market Reception and Zacks Evaluation

Shares of Archer Daniels, rated Zacks Rank #3 (Hold), have appreciated 13.2% over the past three months, slightly trailing the broader industry performance of 14.8% growth during the same period. This relative underperformance reflects investor concerns about segment-level operational challenges and margin recovery uncertainties heading into 2026.

The company’s mixed Q4 results highlight the complexity of its diversified business model, where exposure to volatile agricultural commodities, energy markets, and global trade flows creates earnings volatility. While management’s 2026 guidance suggests potential recovery in crush margins and trade normalization, execution risks remain elevated, particularly regarding U.S. biofuel policy developments and global demand stabilization across key segments.