ADM — Q2 2026 Financial Report Analysis

Overview

ADM buys, stores, ships and processes agricultural commodities — mostly soybeans, other oilseeds, corn and wheat — and sells the resulting oils, protein meals, sweeteners, starches, ethanol and food ingredients. Its profits come from processing margins, not from the price of the crops themselves, which is why revenue and cost of goods tend to rise and fall together with commodity prices.

In the quarter ended June 30, 2026 (10-Q filed August 4, 2026), earnings before income taxes were $1,088 million against $279 million a year earlier, and net earnings attributable to ADM were $908 million versus $219 million. Reported diluted earnings per share (EPS — profit divided by shares outstanding) went from $0.45 to $1.87.

That fourfold jump flatters the quarter. The year-ago period carried $324 million of impairment, exit and restructuring costs and investment revaluation losses, per the filing's own reconciliation. Stripping one-off items from both periods, adjusted diluted EPS was $1.84 against $0.93 — still close to a doubling, and the number that describes what actually changed in the business.

Key metrics

Segment operating profit is ADM's own measure of how each business performed, before corporate overhead, interest and one-off charges. "kt" is thousand metric tons of raw material put through ADM's plants.

Where the profit came from

All three reportable segments improved, but the swing is concentrated in one subsegment.

Ag Services and Oilseeds: $867M vs $379M. Within it, Crushing — the business of pressing soybeans and other oilseeds into vegetable oil and protein meal — went from $33 million to $363 million. The MD&A attributes the improvement to "margin improvement across the business, particularly in North America, where results were supported by the favorable RVO announcement, higher soybean meal sales, and higher crush volumes," plus $20 million of insurance proceeds tied to the Decatur East plant. The RVO is the Renewable Volume Obligation: the quantity of biofuel the U.S. Renewable Fuel Standard requires refiners to blend. Higher mandated volumes mean more demand for the vegetable oil that goes into renewable diesel, which widens the spread between what ADM pays for soybeans and what it gets for the oil and meal.

Ag Services (originating, storing and moving grain) rose from $113 million to $293 million on higher ocean freight and trading margins in Global Trade, the return of the Barcarena, Brazil grain export terminal to full operations — which lifted soybean exports as Brazilian farmers sold more of their crop — and higher freight rates in Transportation.

Two pieces moved the other way inside the same segment: Refined Products and Other slipped to $151 million from $156 million on negative mark-to-market and timing effects and weaker South American margins, only partly offset by better North American and EMEA refining margins; and ADM's share of Wilmar earnings fell to $60 million from $77 million.

Carbohydrate Solutions: $411M vs $337M (+22%). Starches and Sweeteners rose to $326 million from $304 million on higher ethanol margins supported by policy incentives at ADM's corn wet mills, partly given back to lower global liquid sweetener volumes and margins and higher manufacturing costs. Vantage Corn Processors, the dry-mill ethanol business, more than doubled to $85 million from $33 million on the same ethanol margin strength plus hedging. Global Wheat Milling was flat, with stable volumes "against a more competitive pricing backdrop."

Nutrition: $172M vs $114M (+51%) on falling revenue. Segment revenue declined 4.6% to $1,902 million, because ADM has been pruning the portfolio: lower sales volumes cost $95 million, reflecting divestitures and the formation of the Akralos Holding Company joint venture, and the prior-year quarter also included a $55 million contract cancellation benefit. Profit rose anyway, on higher Flavors sales and margins, foreign-exchange gains and the continued recovery of the Decatur East plant. Animal Nutrition improved to $33 million from $22 million on portfolio actions and cost cuts. This is margin repair on a shrinking base, not volume growth.

Takeaway: The near-quadrupling of reported EPS mostly measures how poor Q2 2025 was. The real signal is that adjusted EPS still nearly doubled to $1.84, and that almost all of the gain traces to one cause — a U.S. biofuels policy decision that reset crush and ethanol margins. ADM captured it well through higher volumes and utilization, but it did not create that margin and cannot control how long it lasts.

What the headline number overstates

Four adjustments are worth making before treating $1.87 as the new run rate.

1. The comparison base. Q2 2025 absorbed $137 million of restructuring charges (mostly in Nutrition) and $187 million of investment revaluation losses that sat in the interest and investment income line — the latter alone is why that line swung $186 million, to $116 million of income from $70 million of expense. Working the other way, the year-ago quarter also booked a $69 million gain on a contract termination.
2. Timing, not realized margin. The filing states current-quarter results "included net positive mark-to-market and timing impacts of approximately $100 million, primarily attributable to the Crushing subsegment." Mark-to-market gains arise when open hedges are revalued ahead of the physical transaction they protect; roughly a fifth of the Ag Services and Oilseeds improvement is therefore pulled-forward rather than banked.
3. Revenue growth is price, not volume. The $1.5 billion revenue increase came from $2.0 billion of higher selling prices for oils, soybeans and biodiesel, against $356 million of lower corn and soybean sales volumes. ADM says plainly that price moves hit revenue and cost of products sold roughly equally, so the top-line growth is close to economically meaningless on its own — the 2.1-point gross margin expansion is the part that matters.
4. Tax. The effective rate fell to 16.2% from 22.2%, driven by non-taxable benefits under Section 45Z (the U.S. clean fuel production credit) and the tax effects of the prior year's impairments. Holding the rate at last year's 22.2%, net earnings would have been roughly $843 million rather than $908 million — about $0.13 per share of the improvement is tax, not operations (author's calculation from the filing's pre-tax figures).

One cost line also deserves attention: unallocated corporate function costs rose to $374 million from $294 million on higher employee compensation, and consolidated SG&A rose $115 million. Stock compensation expense for the half nearly doubled, to $138 million from $72 million. Segment gains are being partly absorbed by the centre.

Cash: earnings up, cash flow down

For the first six months, net earnings including non-controlling interests were $1,215 million versus $509 million, but cash provided by operating activities fell to $1,299 million from $3,956 million. The gap is entirely working capital — the cash tied up in inventory and unpaid customer invoices. In H1 2025 ADM released $2,152 million from inventories and $1,261 million from segregated investments; in H1 2026 inventories consumed $298 million, trade receivables $379 million and other current assets $549 million, partly offset by an $852 million build in accrued expenses.

Rebuilding inventory at higher commodity prices is consistent with the pricing commentary and is not a margin problem, but the profit recovery has not yet converted into cash. Capital expenditure was $466 million in the half against full-year guidance of $1.3–1.5 billion, implying a heavy second-half spend. ADM paid $510 million of dividends ($0.52 per share quarterly, up from $0.51), repaid a net $389 million under credit lines, and repurchased no stock in the half.

Guidance and trajectory

Management raised full-year 2026 adjusted EPS guidance to approximately $5.15–$5.60, from $4.15–$4.70. The stated reason is expected year-over-year improvement in crushing and ethanol, from a margin environment the company attributes primarily to the finalized 2026 and 2027 RVOs under the Renewable Fuel Standard in March 2026, supported by global trade dynamics and elevated energy prices, plus continued improvement in Nutrition. Capital expenditure guidance is unchanged at $1.3–1.5 billion.

With $2.56 of adjusted EPS delivered in the first half, the new range implies $2.59–$3.04 in the second — flat to roughly 19% above the first-half rate. That is an aggressive shape for a business whose second half depends on the North American harvest and on margins ADM does not set, and it requires the crush and ethanol spread to hold rather than merely persist at current levels.

The honest read on trajectory: the earnings driver here has a defined runway, because the RVOs are set through 2027, and a defined vulnerability, because the same policy that created the margin can be revised. Three things to watch into Q3 and Q4 — whether crush margins hold once the roughly $100 million of positive timing reverses; whether corporate cost growth keeps eating into segment gains; and whether Nutrition's margin recovery survives the shrinking revenue base it is being achieved on.