Global agribusiness giant ADM cancelled a conference call with analysts to discuss its third-quarter earnings due to more concerns about its accounting practices, World Grain reported.
First announced in January, ADM was still working to correct issues with its financial reporting of transactions between its business units, the 6 November report said.
Despite cancelling the meeting scheduled to take place on 5 November, the company announced earnings results from the quarter ended 30 September, but said the published figures were “preliminary and unaudited”.
ADM said it would make formal corrections “as soon as reasonably possible” but did not expect the changes would have a “material impact” on the quarterly results.
“We strive for accuracy and transparency in all aspects of our business. While we have made progress, we are committed to continued strengthening of our internal financial controls,” ADM’s chair of the board and CEO Juan Luciano was quoted as saying.
After ADM cancelled its investors conference call, the company’s stock price dropped by 11% on 5 November from US$55.75 to US$50.21, ending the day at US$52.
Since announcing the accounting issue, ADM’s stock price had dropped by 25%, World Grain wrote.
The preliminary and unaudited third-quarter results included net earnings that were expected to be US$18M, with adjusted net earnings forecast at US$530M.
“Our third quarter operating results were mixed in a challenging quarter for the business,” Luciano said.
“While Carbohydrate Solutions achieved strong results, our Ag Services and Oilseeds and Nutrition businesses delivered results below expectations, impacted by softer than expected market conditions and the pace of our planned improvement efforts.”
The Ag Services and Oilseeds and Nutrition segment posted an operating profit of US$480M during the third quarter, down 43% compared to the same quarter the previous year.
Within that segment, crushing operating profit was 25% lower compared to the same quarter the previous year.
ADM noted that while global soyabean crushing margins were higher, “an increase in canola seed prices due to less supply in Europe drove lower canola crush margins, leading to lower results.”
