ADM Q2 profit falls to 5-year low amid trade turmoil

By Karl Plume and Katha Kalia

Aug 5 (Reuters) - Archer-Daniels-Midland ADM.N posted its lowest second-quarter profit in five years on Tuesday as U.S. trade upheaval and uncertainty around biofuel policies slowed sales and crimped trading and crop processing margins.

The company warned that full-year 2025 adjusted earnings would drop to around $4.00 per share, the lowest since 2020, after a weak first half with ongoing global trade challenges.

But ADM forecast a better operating climate later this year as recent U.S. government proposals to increase biofuel use and support domestic feedstocks were poised to boost crop processing margins and sales, sending its shares up as much as 5.3%.

"We are well-positioned to exit 2025 with strong momentum and we remain confident in our ability to execute on opportunities that may emerge with greater policy clarity," CEO Juan Luciano said.

Chicago-based ADM is bracing for the impact of U.S. President Donald Trump's sweeping tariffs on most imports, and any trade retaliation which often targets agricultural products.

Luciano said ADM has seen no changes in sales or orders for high fructose corn syrup since Trump said on social media last month that Coca-Cola would shift to cane sugar-sweetened drinks in the United States.

ADM and agribusiness peers including Bunge BG.N and Cargill have reported eroding profits in recent quarters due to ample global crop supplies and thinning margins. Trump's tariff threats and shifting deadlines for duties have fueled further chaos for global grains merchants like ADM.

U.S. biofuel policy uncertainty had dented demand for green energy feedstocks like corn and soybean oil, but recent policy changes should be supportive from the fourth quarter and beyond, ADM said.

"With greater clarity on biofuel policy emerging in recent months, we believe ADM is positioned for recovery as macro headwinds ease," said Arun Sundaram, senior equity analyst at CFRA Research.

Investor confidence could also improve after ADM said it has remediated material weaknesses in internal controls following an accounting scandal last year, Sundaram said.

ADM reported adjusted net earnings of $452 million, or 93 cents per share, for the quarter ended June 30, down from $508 million, or $1.03 per share, a year ago.

Analysts, on average, had expected earnings per share of 83 cents, according to data compiled by LSEG.