Shares of ADM (ADM) slumped in pre-market trading after the company postponed its third-quarter conference call, slashed its FY24 profit outlook, and announced plans to amend its FY23 filings and the quarterly filings for the first and second quarters of FY24. Additionally, the food processing and commodities trading company announced its preliminary Q3 results.
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ADM Announces Preliminary Q3 Results
In the third quarter, ADM’s adjusted earnings declined by 33.1% year-over-year to $1.09 per share, falling short of Street estimates of $1.24 per share. ADM’s Chair of the Board and CEO, Juan Luciano, commented, “Our third-quarter operating results were mixed in a challenging quarter for the business.”
Furthermore, Luciano pointed out that while its Carbohydrate solutions (starch products) business reported strong results, its “Ag Services and Oilseeds [agricultural raw materials] and Nutriton businesses delivered results below expectations, impacted by softer than expected market conditions and the pace of our planned improvement efforts.”
As a result, ADM lowered its FY24 outlook and now expects adjusted earnings per share in the range of $4.50 to $5.00.
ADM Will Restate Financial Statements
Additionally, the company will amend its financial statements for FY23, including Form 10-Q for the first two quarters of this year, after identifying further accounting issues. The amended filings will correct newly discovered errors tied to intersegment sales as the company works to rectify these issues. ADM expects these amendments to be completed “as soon as reasonably practicable” and stated they are “not expected to materially impact results on a consolidated basis.”
The restatement of ADM’s financial statements comes amid ongoing scrutiny of ADM’s internal practices. Since January, the company has been conducting an internal investigation into transactions between its Nutrition business and other segments, which led to the initial accounting issues. Due to this development, ADM has canceled its Q3 earnings call on November 5.
Is ADM Stock a Good Buy?
Analysts remain sidelined about ADM stock, with a Hold consensus rating based on three Holds and one Sell. Over the past year, ADM has plunged by more than 20%, and the average ADM price target of $60.33 implies an upside potential of 9.1% from current levels.
