ADM strengthens focus on productivity and operations amid accounting issues
USA – Archer Daniels Midland (ADM) is redoubling its focus on productivity and operations while maintaining disciplined approach to capital allocation.
During the third quarter financial reporting, the company said it foresee softer market conditions into next year despite accounting issues it faced.
Juan Luciano, ADM’s chairman and CEO, emphasized the importance of maintaining strong internal controls and accurate financial reporting, adding that “We are committed to transparency and improving our financial processes.”
The company’s total segment operating profit fell 28.3 per cent to $1.04 billion (C$1.46 billion) in the quarter after restatement, while profit for Ag Services & Oilseeds segment slumped 43 per cent in the same period.
For the third quarter, ADM reported preliminary net earnings of US$18 million and adjusted net earnings of US$530 million.
Adjusted earnings per share are forecast at US$1.09, compared to US$1.52 in the same period last year.
The Ag Services and Oilseeds segment reported a 43% drop in operating profit to US$480 million, with lower margins in canola crushing due to increased European seed prices.
Other divisions also faced challenges. Carbohydrate Solutions saw a 3% decline in operating profit to US$452 million, while the Nutrition segment recorded a 19% drop to $105 million.
ADM revised its 2024 adjusted EPS guidance to $4–$5, down from $5.25–$6.25, citing reduced market demand, regulatory uncertainties, and internal challenges.
Further accounting irregularities surfaced more recently, and the Chicago-based company on Nov. 5 delayed its earnings release so it could amend financial statements for 2023 and the first two quarters of 2024.
The emergence of more accounting errors has heaped pressure on ADM’s leadership under CEO Juan Luciano and rattled investor confidence in the company.
Following the announcement, ADM’s stock price dropped 11%, from US$55.75 to US$50.21, before recovering slightly to close at US$52.
This marks a 25% decline in ADM’s stock value since the accounting concerns were first revealed 10 months ago.
The initial disclosure in January delayed ADM’s first-quarter earnings report and led to the administrative leave of Chief Financial Officer Vikram Luthar.
Luthar later resigned in April, with Monish Patolawala taking over as CFO in August after an interim period by Ismael Roig.
ADM is working with the Securities and Exchange Commission to restate financial results for 2023 and the first two quarters of 2024.
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