ADM Lays Out Strategic Plan for Sustainable Earnings Growth, Including Target Milestone of $6.00-$7.00 EPS by 2025 and Continued Growth Beyond
Productivity and Innovation to Drive Profit Growth Across All 3 BUs
Targeting Doubling of Nutrition Profitability to Range of $1.25B-$1.5B by 2025
Continued Focus on Returns; Targeting $1B EVA by 2025, Propelling Value Creation for Shareholders
Balanced Capital Allocation Strategy, Including Potential $5B in Share Repurchases Over Plan Horizon
New Goal to Reduce Scope 3 GHG Emissions 25% by 2035
14 December 2021, Chicago: ADM, a global leader in nutrition and agricultural origination and processing, hosted its 2021 Global Investor Day, unveiling a comprehensive plan to drive continued earnings growth to $6.00-$7.00 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 $3.00 to our new normalized baseline of $4.50 per share,” said Chairman and CEO Juan Luciano. “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 $6.00-$7.00 per share by 2025.”
The company detailed a five-year plan with targets including:
- Net incremental operating profit growth of $1.2B, which translates to high single-digit percentage EPS growth from a current normalized baseline of $4.00-$4.50 per share to a new baseline of $6.00-$7.00 by 2025.
- Growth across all three business units, with Nutrition targeting $1.25-$1.5B in operating profit by 2025.
- A consistent and strong framework for shareholder value creation, including a continued dividend payout ratio of 30-40% of earnings, and about $5B in share repurchases, absent significant other uses of cash.
- A continued target of 10% return on invested capital, significantly above the company’s long-term weighted average cost of capital of 7%, and generating $1B in EVA (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 compelling 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 continued. “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 $6.00-$7.00 EPS range by 2025, and more importantly will position us for sustained growth for years to come.”
To view a replay of ADM’s 2021 Global Investor Day, go to www.adm.com/investorday.
Some of the above statements constitute forward-looking statements. ADM’s filings with the SEC provide detailed information on such statements and risks, and should be consulted along with this release. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements.