USA – Archer Daniels Midland Company (ADM) witnessed a downturn in its stock value on January 22, following the revelation that its Chief Financial Officer, Vikram Luthar, is on administrative leave amidst a Securities and Exchange Commission (SEC) investigation into accounting practices within its nutrition segment.
ADM’s stock opened at US$56.88 on January 22, marking a sharp decline of 16.6% from its previous closing value of US$68.19 on January 19. The downward trend persisted throughout the day, with the stock trading at US$56.85 at 8:40 a.m. CST on the same day.
Luthar’s administrative leave is a response to a “voluntary” request for documents from the SEC. ADM’s external legal counsel and board audit committee are scrutinizing accounting practices within the nutrition segment, focusing on intersegment transactions. Luthar, who assumed the role of CFO in April 2022, has been associated with ADM since 2004.
Ismael Roig, an executive with an extensive history at ADM, holding positions such as President of Europe, Middle East, and Africa operations, as well as President of Animal Nutrition, has been appointed as interim CFO.
Roig, who joined ADM in 2004 and previously spent 11 years at General Motors Corp., expressed commitment to working collaboratively with ADM’s management team and board during this challenging period.
Terry Crews, lead director at ADM, emphasized the gravity of the situation, stating, “The board takes these matters very seriously,” and highlighted the board’s commitment to aligning ADM’s processes with financial governance best practices.
Roig, addressing the ongoing SEC probe, stated, “I look forward to working closely with the management team and board, including the audit committee, as we resolve this matter and continue to drive value for our stockholders and customers.”
ADM’s nutrition segment contributed US$468 million to the company’s US$4.67 billion operating profit in the first nine months of the year. The investigation into accounting practices within this segment includes a focus on intersegment transactions.
In addition to the SEC probe, ADM fell short of profit expectations, reporting adjusted earnings per share above US$6.90 for the fiscal year, below the anticipated US$7.27 forecasted by analysts.
However, ADM’s ag services and oilseeds, as well as carbohydrate solutions units, are expected to report results in line with the expectations outlined in the third quarter.
Over the past year, ADM’s stock has witnessed a 19% decline, contrasting sharply with the S&P 500’s 22% gain. The stock’s 52-week high and low stand at US$87.30 and US$55.76, respectively.
The company faces a challenging period as it navigates the SEC investigation and strives to regain investor confidence.
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