Key Takeaways

  • ADM announced in its Q4 2024 earnings report plans to cut approximately 600 to 700 positions, including about 150 unfilled roles, as part of achieving $200 million to $300 million in cost savings in 2025 and up to $750 million in savings over the next three to five years.
  • ADM CEO Juan Luciano said in the earnings statement that the company is facing "a weak global market environment and policy uncertainty in 2025."
  • CFO Monish Patolawala said on Tuesday's earnings call that the company is still working to eliminate the material weakness in financial reporting related to inter-segment sales, which had led to a restatement last year. He said, "This is a matter of high focus for us."

Deep Dive

Chicago-based ADM's accounting issues began over a year ago when the company placed then-CFO Vikram Luthar (who later resigned last year) on administrative leave pending an investigation into internal accounting practices. In March 2024, the company confirmed it was cooperating with related government investigations by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice.

On Tuesday's call, executives did not mention the progress of the investigations, and the company did not immediately respond to requests for comment. However, Patolawala (who joined in July from industrial manufacturer 3M) reiterated the company's commitment to fixing the accounting weaknesses and provided new details on strengthening internal controls.

In addition to continuously improving the design, controls, and documentation of inter-segment sales, the company is training employees on sales reporting and recognition and has strengthened and tested multiple controls. However, he said the remediation work is not yet fully complete.

"We need to ensure it continues for a period of time before we can eliminate the material weakness. That is exactly what the team is focused on right now," Patolawala said.

Morningstar strategist Seth Goldstein said last week that while an update on the progress of the government investigations would help the market, he does not expect the company to disclose information until the case is settled, resolved, or otherwise concluded. "Companies are often reluctant to comment without substantive progress," he said.

Meanwhile, he acknowledged that investor confidence may have declined, especially after a new round of accounting issues emerged last fall. In November 2024, the company disclosed additional accounting errors, canceled its earnings call, and said it would amend its fiscal 2023 10-K and two 2024 10-Q filings after communicating with the SEC (as previously reported by CFO Dive).

According to the company's earnings report, fourth-quarter revenue fell 6% year-over-year to $21.5 billion, missing the market expectation of $22.7 billion; adjusted earnings per share were $1.14, in line with expectations (according to a JPMorgan report on Tuesday).