Grains merchant ADM slides on fresh accounting errors, profit forecast cut

Archer-Daniels-Midland shares fell eight per cent premarket on Tuesday after the global grains merchant cut its adjusted annual profit forecast and said it would amend its previous financial statements after finding fresh accounting irregularities.

The company is set to lose about $2.3 billion (C$3.2 billion) of its market value if premarket losses hold through the day.

Archer-Daniels-Midland said it will amend its fiscal year 2023 Form 10-K and statements for the first and second quarter of this year.

This comes months after ADM corrected six years of financial data after an internal investigation found some sales between business units within the company were not recorded properly.

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The accounting irregularities have sparked several government investigations and led to the departure of CEO Vikram Luthar in September.

“Investors will undoubtedly be disappointed that this accounting overhang has returned,” CFRA analyst Arun Sundaram said, adding that they would also question whether ADM will achieve its 2025 financial targets that were set three years ago.

The company postponed its earnings call, which was scheduled for Tuesday, and now expects to hold a webcast after it has filed the amended statements.

The restated filings will include some newly identified errors concerning additional intersegment sales for all three of its main segments, the company said late on Monday.

ADM said it does not expect any material impact and was working to complete the restatements as soon as “reasonably practicable”, but cut its 2024 adjusted earnings forecast to $4.50 to $5 per share, from $5.25 to $6.25 it had estimated earlier.

The company reported adjusted profit per share of $1.09 for the third quarter ended Sept. 30, compared with the average analyst estimate of $1.25, according to data compiled by LSEG.

ADM’s operating profit from Ag Services and Oilseeds segment, its largest by revenue, slumped 43 per cent from a year earlier.

The company also paid $96 million (C$133 million) in settlement claims in the quarter.