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Commodities trader Archer Daniels Midland cancelled its quarterly results call with investors on Tuesday after finding financial-reporting errors, the latest mishap for a company that put its finance director on leave earlier this year.
Chicago-based ADM fell as much as 11.5 per cent in early trade, the most since it first announced accounting problems at its nutrition unit and delayed the publication of financial results in January. The stock has lost 26 per cent since the January announcement and was last trading at $50.65.
The company said it had called off a webcast scheduled for 9am Chicago time to discuss third-quarter results, which were released on Tuesday, so that it could work “diligently” to “finalise” its financial statements.
It stressed that the published figures for the three months to September 30 were preliminary and unaudited.
ADM, one of a few companies that dominate the international trading and processing of grain and oilseeds, was plunged into crisis in January when it announced a probe into accounting practices and put finance chief Vikram Luthar, who has since resigned from the company, on administrative leave.
The company also cut its forecast for full-year adjusted earnings per share, a measure that excludes the effect of some debt types and lease obligations, from a range of between $5.25 and $6.25 to between $4.50 and $5.
Chief executive Juan Luciano said the integrity of ADM’s internal controls and financial reporting was “very important” and that the company was “committed to continued strengthening of our internal financial controls”.
Net earnings for the quarter fell to $18mn, from $821mn in the corresponding period last year, after the company wrote down about $500mn in investments. The value of the writedowns jumped from $54mn in the third quarter of 2023.
The charges were mainly due to a $461mn write-off of the value of ADM’s holding in Wilmar International, a Singapore-listed food processor.
Luciano said that the carbohydrate solutions division — which makes starch, flour and other corn and wheat products — had achieved “strong results”. But ADM’s two other main segments, nutrition and ag services and oilseeds, had delivered “results below expectations”.
“We are taking the necessary actions to improve performance and drive continued value creation,” Luciano said.
The restatements relate to confusion relating to reporting of figures that were reported as sales between different segments of ADM (intersegment) that were in fact within an individual segment (intrasegment). The company said that it had found further misclassified sales when testing its new systems.
“These newly identified errors concern additional intersegment sales for each of its ag services and oilseeds, carbohydrate solutions and nutrition segments that included certain intrasegment sales and should have included exclusively intersegment sales,” the company said.
ADM said it was working with the US Securities and Exchange Commission on restatements to its 2023 results, as well as those for the first and second quarters of 2024.
ADM did not say when it would publish the restated figures, but stated that it was working to complete the process “as soon as reasonably practicable”.