Archer Daniels Midland (ADM) postponed its third-quarter earnings call at the last minute due to accounting issues.
The crop trader was due to publish its financial results today, instead, a surprise preliminary report was released late on Monday (4 November), where a cut in its guidance as well as earnings was outlined.
ADM identified errors concerning additional intersegment sales involving its ag services and oilseeds, as well as other segments, while testing new controls, the crop trader said in a statement.
The company, following discussions with the SEC, said it will amend its 2023 Form 10-K as well as financial statements for the first and second quarters, which it said is not expected to result in any material impact.
The Chicago-based company expects to complete the restatements “as soon as reasonably practicable”.
Shares of the crop trader on Monday slipped to $55.30, down about 23% year to date on the New York Stock Exchange, and were at $50.44 as of 08.30 EST.
Preliminary results
In its preliminary and unaudited estimates, the company said its earnings per share would slump 33% from a year ago to $1.09.
ADM’s net earnings are expected to plummet to $18m, down from $821m this time last year, although it admitted that the results could differ from the final amounts that it ultimately reports.
Company chair and chief executive Juan Luciano said in a statement: “Our third-quarter operating results were mixed in a challenging quarter for the business.
“Our ag services and oilseeds and nutrition businesses delivered results below expectations, impacted by softer than expected market conditions.”
Soy prices have tumbled over 2024 due to abundant crops, hitting a three-year low in July.
Brazil seaborne soybean exports were just over 101m tonnes in 2023, according to Clarksons, although volumes are forecast at 105m tonnes in 2024 and 104m tonnes next year.
The company’s ag services and oilseeds segment saw its operating profit, preliminarily estimated at $480m during the third quarter of 2024, down 43% compared to the prior-year quarter.
ADM attributed this primarily to “lower results in South America origination, as slower farmer selling and higher logistics costs related to industry take-or-pay contracts led to lower margins”.
In addition, the prior year quarter also included $48m of insurance proceeds related to Hurricane Ida.
The company also lowered its previously provided adjusted earnings per share guidance for the full year in the range of $4.50 to $5.00.
This was based on trends in ADM’s performance to date, legislative and regulatory policy uncertainties, and ongoing headwinds from slower market demand and internal operational challenges, it said.
