Chicago, Illinois – Investors of Archer-Daniels-Midland Co. saw a jump in the commodity giant’s shares after the release of its delayed annual report on Tuesday. The report did not reveal any significant financial discrepancies that had been feared.
In the annual report, ADM made revisions to its intersegment sales for the last three years after conducting an internal investigation into its financial reporting. The company also disclosed a $137 million impairment charge related to its animal nutrition unit. Despite these adjustments, ADM confirmed that the overall earnings were not impacted.
Following the long-awaited update on its financial reporting investigation, ADM announced quarterly results, 2024 guidance, and a $2 billion share buyback. These announcements contributed to the rise in shares by as much as 5.6%, helping to recover some of the losses the stock had experienced since the disclosure of the investigation in January.
Analysts noted that the adjustments and charge were not as significant as initially feared, describing them as relatively minor. This information offered investors insight into the scandal that had led to a decrease of over $7 billion in ADM’s value prior to the report.
Earlier this year, ADM had suspended its chief financial officer and launched an investigation into accounting practices following an inquiry from the US Securities and Exchange Commission. Despite the challenges, the company stated that the “material weakness” in internal controls discovered during the investigation was not expected to have a broad impact on earnings.
ADM’s CEO, Juan Luciano, acknowledged the lack of adequate controls around intersegment sales within the nutrition segment and other key units. The company outlined a plan to address this issue and stated that it had taken steps to remediate the material weakness.
The restated financials included reductions in segment operating profits for the nutrition unit across multiple years, along with adjustments to gross revenues. The investigation spanned from January 2018 to September 2023, providing a comprehensive review of ADM’s financial practices.
While ADM has taken steps to address the issues identified in the investigation, it confirmed that certain current and former employees have received subpoenas from the Department of Justice. Despite challenges, ADM has continued to expand its nutrition business in recent years through acquisitions, aiming to diversify its portfolio and capture new market opportunities.