Archer-Daniels-Midland Shares Plummet on Disappointing Q3 Results
Earnings Miss and Guidance Cut Send Stock Tumbling
Archer-Daniels-Midland Company (NYSE: ADM) shares took a hit on Tuesday, plummeting 9.3% to $50.16, following the release of its third-quarter preliminary adjusted earnings per share of $1.09, significantly below the street view of $1.25.
Restatements and Corrections Ahead
The company has announced plans to restate its previously filed fiscal year 2023 Form 10-K and subsequent Forms 10-Q, citing newly identified errors related to intersegment sales. The restated filings will also reflect previously corrected errors and provide additional disclosures applicable to restated segment information.
Mixed Q3 Operating Results
Chair of the Board and CEO Juan Luciano described the company’s third-quarter operating results as “mixed” in a challenging quarter for the business. Archer-Daniels-Midland reported net earnings of $18 million, with adjusted net earnings forecasted at $530 million. However, the company anticipates a substantial $461 million non-cash charge against GAAP earnings for the third quarter related to its Wilmar equity investment.
Segment Performance Varies
The Ag Services and Oilseeds (AS&O) segment operating profit was $480 million during the third quarter of 2024, a 43% decline compared to the prior-year quarter. In contrast, the Carbohydrate Solutions segment operating profit was $452 million for the third quarter of 2024, down only 3% compared to the prior year period. The Nutrition segment operating profit was $105 million for the third quarter of 2024, a 19% decline compared to the prior year period.
Lowered Guidance and Outlook
The company has revised its 2024 adjusted EPS guidance to a range of $4.50 – $5.00, down from the previous range of $5.25 – $6.25, and below the $5.23 analyst estimate. This revised outlook reflects trends in ADM’s performance to date, legislative and regulatory policy uncertainties, and ongoing headwinds from slower market demand and internal operational challenges.
Leadership Response
Luciano emphasized that the company is taking necessary actions to improve performance and drive continued value creation. Despite the mixed results, he highlighted the strong performance of the Carbohydrate Solutions segment, while acknowledging that the Ag Services and Oilseeds and Nutrition businesses delivered results below expectations due to softer market conditions and the pace of planned improvement efforts.
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