By Ella Cao, Karl Plume and Ana Mano
BEIJING/CHICAGO (Reuters) -Global grain merchant Archer-Daniels-Midland has begun shutting down domestic trading operations in China and laying off staff within its largest business segment as part of a global cost-cutting push, the company said on Monday.
The move is designed to help ADM, which has been embroiled in an accounting scandal since last year, "remain agile in a challenging environment," the company said in an emailed statement.
The company did not disclose the number of layoffs, but a source familiar with the matter said job cuts would impact 40 to 50 employees, leaving only around 10 staff in the financial hub of Shanghai.
"The entire Ag Services and Oilseeds team in China has essentially been let go," the source said, referring to ADM’s largest business segment.
A second source said layoffs would affect some 30 people at ADM’s Toepfer Shanghai subsidiary starting this week, and said it is part of a global cost-cutting effort announced earlier this year.
ADM’s earnings have eroded due to slumping crop prices, inflation-reduced consumer demand and weak crop processing margins, with operating profit down 40% last year in its large Agricultural Services and Oilseeds division.
Rising trade tensions between Washington and Beijing are now stirring up new headwinds for ADM, which relies on trade between top farm goods exporter the United States and China, the top importer.
The phase-out of domestic trading at Toepfer Shanghai was expected to conclude by the end of September, ADM said in its statement, adding that its other operations in Shanghai would not be affected.
ADM began layoffs in February as part of a broader cost-cutting drive to save $500 million to $700 million over the next three to five years. The company had posted its weakest fourth-quarter adjusted profit in six years.
ADM shares ended 1.3% higher on Monday at $46.43 after falling last week to the lowest level in nearly five years.