CHICAGO, ILLINOIS, US — During its 2021 Global Investor Day, Archer Daniels Midland Co. (ADM) shared its plan to drive earnings growth to $6 to $7 per share by 2025.
“We delivered on the commitments we laid out at our last investor day: building a better ADM, dampening volatility of earnings and cash flows, and expanding base earnings by almost 50% from $3 to our new normalized baseline of $4.50 per share,” said Juan Luciano, chairman and chief executive officer. “Now, with a premier Nutrition business and a repositioned portfolio that is well-aligned with enduring global trends, we’re powering strong, high single-digit percentage annualized earnings growth toward our new target milestone target of $6 to $7 per share by 2025.”
The company’s five-year plan detailed several targets, including net incremental operating profit growth of $1.2 billion, which translates to high single-digit percentage EPS growth from a normalized baseline of $4 to $4.50 per share to a new baseline of $6 to $7 by 2025.
ADM also is targeting growth across all three business units with operating profit of $1.25 billion to $1.5 billion for Nutrition by 2025.
The company will continue to build shareholder value with a dividend payout ratio of 30% to 40% of earnings and about $5 billion in share repurchases, absent significant other uses of cash.
ADM said it will target a 10% return on invested capital, significantly above the company’s long-term weighted average cost of capital of 7% and generating $1 billion in economic value-add.
The company also announced that, in addition to its existing Strive 35 goals, which set forth ambitious reduction targets for energy and water use, trash to landfills, and Scope 1 and 2 greenhouse gas emissions, ADM will reduce Scope 3 greenhouse gas emissions by 25% by 2035 from a 2019 baseline.
“We’re committed to continuing to lead in the decarbonization of our industry, and thanks to our broad and integrated value chain, ADM is uniquely positioned to help customers meet their sustainability commitments,” Luciano said. “We’ve worked to enhance sustainable farming practices on more than 13 million acres over the years, and we’re continuing to expand our efforts. We introduced the industry’s first carbon-neutral milling footprint, and thanks to our carbon capture and storage capabilities, we’ve safely and permanently stored more than 3.5 million metric tons of CO2 a mile and a half under the surface of the earth. Sustainability is core to our culture and our business plan, and with the announcement of our new Scope 3 goal today, we’re continuing to deliver change.”
In addition to a five-year growth plan and new sustainability initiatives, ADM leaders detailed a pipeline of opportunities that will boost growth beyond 2025.
“ADM has dynamically positioned its business portfolio for superior performance reinforced by the three enduring macro trends of food security, health and well-being, and sustainability,” Luciano said. “From differentiation and digitalization in Ag Services & Oilseeds, to decarbonization and our growing BioSolutions platform in Carbohydrate Solutions, to continued market growth in Health & Wellness in Nutrition, we’re unlocking opportunities that should push us to the high end of our target $6 to $7 EPS range by 2025, and more importantly will position us for sustained growth for years to come.”