Archer Daniels Midland (ADM) shares have taken a drastic plunge in premarket trading after the agribusiness powerhouse announced that its Chief Financial Officer (CFO), Vikram Luther, has been placed on administrative leave. The reason? An ongoing investigation into accounting practices within ADM’s nutrition segment.
Administrative Leave Following SEC Request for Documents
ADM revealed that Luther had been immediately put on administrative leave in response to a voluntary request for documents from the Securities and Exchange Commission (SEC). As part of the investigation, an external legal counsel and the board audit committee are currently scrutinizing accounting practices, particularly intersegment transactions, within the company’s nutrition segment.
Interim CFO Appointed
To fill the temporary gap left by Vikram Luther, Ismael Roig, a longstanding company executive, has been appointed as the interim CFO.
Challenges Faced by the Nutrition Segment
Over the past nine months, ADM’s nutrition segment contributed $468 million to the company’s operating profit of $4.67 billion. This particular unit is responsible for producing flavors and colors, specialty ingredients, and nutritional supplements. However, it has faced several challenges this year.
Among these challenges is the struggling plant-based protein market, which has affected sales. Additionally, an explosion at a soybean processing plant has significantly impacted production capacity. And to add to the list, the animal nutrition unit is currently undergoing a restructuring.
Delay in Publishing Financial Results
As a result of ongoing investigations and scrutiny, ADM has decided to withdraw all forward guidance regarding its nutrition segment. Consequently, the company has delayed the publication of its fourth-quarter and full-year 2023 financial results.
Adjusted Earnings Per Share Projections
Despite the challenges faced by its nutrition segment, ADM expects to deliver adjusted earnings per share of above $6.90 for the fiscal year. This projection falls slightly short of the $7.27 per share estimated by analysts.
Market Impact
The news of the CFO being placed on leave and the investigation into accounting practices has had a notable impact on ADM’s stock. In premarket action, ADM shares fell by 9%, and the stock has witnessed a 19% decline over the past 52 weeks.
