Archer-Daniels-Midland (ADM), a global grains merchant, revealed a comprehensive plan to rectify accounting discrepancies that necessitated corrections in its financial results spanning six years. The company acknowledged the receipt of grand jury subpoenas from the Department of Justice regarding an ongoing investigation into its accounting practices, signaling a heightened scrutiny of the matter. ADM’s internal probe identified instances where sales between internal business units were not accurately recorded at market values, prompting corrections to segment-specific financial data from 2018 to 2023. Notably, the company overstated the Nutrition segment’s annual operating profit by up to 9.2% during this period. Despite these challenges, ADM’s shares rose by 4.9%, reflecting some market optimism following the disclosure of remedial actions. Analysts, including Arun Sundaram from CFRA Research, upgraded ADM’s rating to “buy,” citing improved clarity on the accounting issue. ADM outlined plans to enhance internal controls, improve financial statement reliability, and ensure transparent valuation of intersegment transactions going forward. However, uncertainties persist as the company navigates through the remediation process and awaits validation of the effectiveness of new controls. Amidst these developments, ADM reported lower-than-expected fourth-quarter earnings, impacted by margin declines in oilseed processing and crop origination, as well as challenges in its Nutrition unit. The company anticipates full-year earnings for 2024 to range between $5.25 and $6.25 per share, reflecting a decline from the previous year due to margin pressures and increased costs, while projecting growth in Nutrition segment revenue and operating income.
ADM Unveils Plan to Address Accounting Issues and Reports Earnings Miss