Agriculture giant ADM places CFO on leave, cuts earnings forecast amid probe

New York – Archer-Daniels-Midland (ADM) has placed its chief financial officer (CFO) on leave and cut its earnings outlook, pending an investigation into the agricultural trading giant’s accounting practices.

CFO Vikram Luthar has been placed on administrative leave, effective immediately, and Mr Ismael Roig will serve as interim CFO, the Chicago-based company said in a statement on Jan 21.

The probe, which is in response to a voluntary document request by the United States Securities and Exchange Commission, surrounds certain practices and procedures with respect to the company’s nutrition reporting segment, ADM said. It is cooperating with the commission.

ADM has spent billions expanding its nutrition business since 2014, when it made its biggest-ever acquisition – the US$3 billion (S$4 billion) buyout of European natural ingredient maker Wild Flavors – in a bid to diversify into value-added products. Profits have failed to live up to initial expectations, however, due to weakening demand, including for plant-based food. 

The segment’s operating income is forecast to drop more than 18 per cent in 2023 to the lowest since 2020, according to analyst estimates compiled by Bloomberg. In November 2023, ADM chose long-time executive Ian Pinner to lead the embattled business.

The company – one of the world’s biggest agricultural traders – is withdrawing its outlook for the nutrition unit and expects to delay its fourth-quarter and full-year earnings release, it said.

ADM expects to deliver above US$6.90 in adjusted earnings per share for the year ended Dec 31, after having predicted in October full-year profits in excess of US$7 per share. 

This is not the first scandal involving ADM. Back in the 1990s, it was implicated in a price-fixing conspiracy that later became the basis of a 2009 film, The Informant!, starring actor Matt Damon. ADM pleaded guilty to the price-fixing charges in 1996. The company is also responding to different lawsuits over allegations of price manipulation involving its trading of cotton and ethanol. 

“The board takes these matters very seriously,” Mr Terry Crews, lead director at ADM, said in the statement. “The board will continue to work in close coordination with ADM’s advisers to identify the best path forward and ensure ADM’s processes align with financial governance best practices.”

Shares of ADM have slumped 19 per cent over the past year, trailing the performance of its larger rival Bunge Global. BLOOMBERG