(Bloomberg) – Archer-Daniels-Midland Co. said it will restate previous financial statements after uncovering accounting issues, prompting the crop trader to cancel its quarterly earnings call with analysts 14 hours before the start.
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ADM said Monday evening that in testing new internal controls, it had discovered additional errors in the way it reported sales between its Ag Services and Oilseeds, Carbohydrate Solutions and Nutrition business segments. After discussions with the Securities & Exchange Commission, ADM said it will restate its financial statements for last year and the first and second quarters of 2024. It does not expect any material impact from the revisions.
ADM shares fell as much as 12% in New York trading on Tuesday.
The disclosure follows the news in January that ADM was investigating transactions between segments. That revelation threw the company into disarray, wiping out more than $8 billion in market value in just one day, while also prompting the U.S. Department of Justice and the SEC to investigate its accounting practices. ADM fired its chief financial officer, Vikram Luthar.
The developments also highlight CEO Juan Luciano’s push to reduce ADM’s dependence on its traditional businesses of trading corn and soybeans and refining ethanol. The Argentine-born industrial engineer has spent billions of dollars over the past decade acquiring Wild Flavors GmbH and pet food maker Neovia — the company’s biggest deals ever — in an effort to turn ADM into a nutritional powerhouse.
These bets did not meet expectations, partly due to the faltering demand for plant-based ingredients and animal feed. The company has also faced a decline in crop prices around the world and lower profits from processing soybeans into flour and oil – a key profit driver – amid increased milling capacity in the US. ADM closed its only soybean mill in Iowa for maintenance during the current harvest of a record US crop, further eroding its ability to make profits from processing.
ADM was expected to release its third-quarter financial statement before the start of trading on Tuesday. In its surprise preliminary report late Monday, the company said earnings, excluding some items, fell 33% from a year ago to $1.09 per share. That missed even Bloomberg’s lowest analyst estimates.