(Bloomberg) — Archer Daniels Midland Co. has placed its chief financial officer on leave and lowered its earnings outlook pending an investigation into the agricultural products trading giant’s accounting practices.
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The company announced in a statement on Sunday that Chief Financial Officer Vikram Luthor has been placed on administrative leave, effective immediately, and Ismael Roig will serve as interim chief financial officer.
ADM said the investigation is in response to a voluntary document request from the Securities and Exchange Commission and concerns certain practices and procedures related to the company's nutrition reporting division. We are cooperating with the SEC.
ADM has made several expansions into its nutrition business since 2014, when it made its largest acquisition in history with the acquisition of European natural ingredient manufacturer Wild Flavors for $3 billion to diversify into value-added products. We've spent billions of dollars. However, profits fell short of initial forecasts due to a decline in demand for plant-based foods and other products.
The segment's operating profit is expected to fall more than 18% in 2023, the lowest since 2020, according to analyst estimates compiled by Bloomberg. In November, ADM selected long-time executive Ian Pinner to lead the troubled business.
The Chicago-based company, one of the world's largest agricultural products traders, withdrew its outlook for its nutrition division and said it expects to delay reporting fourth-quarter and full-year earnings. ADM had expected full-year earnings of more than $7.00 in October, but now expects adjusted earnings per share of more than $6.90 for the year ending Dec. 31.
Read more: Crops trader ADM slumps after deal to grow nutrition business
This is not the first scandal involving ADM. In the 1990s, he was implicated in a price-fixing conspiracy that later became the basis for his 2009 film The Informant!, starring Matt Damon. ADM pled guilty to price-fixing charges in 1996. The company is also dealing with various lawsuits over alleged price-fixing in the cotton and ethanol trade.
“The board takes these matters very seriously,” Terry Crews, ADM's principal director, said in a statement. “The Board will continue to work closely with ADM’s advisors to identify the best path forward and ensure that ADM’s processes are aligned with financial governance best practices.”
ADM's share price has fallen 19% over the past year, lagging the performance of larger rival Bunji Global SA.
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