ADM suspends finance chief, lowers earnings outlook

(Sharecast News) - American agricultural trader Archer-Daniels-Midland (ADM) put its chief financial officer Vikram Luthar on administrative leave overnight, lowering its earnings outlook as it investigated its accounting practices. The company announced the decision in a statement late on Sunday, naming Ismael Roig as its interim CFO.

It said the investigation was started in response to a voluntary document request from the US Securities and Exchange Commission (SEC), and revolved around specific practices and procedures within ADM's nutrition reporting segment.

According to Bloomberg, ADM had invested significantly in expanding its nutrition business in recent years, including the acquisition of European natural ingredient maker Wild Flavors for $3bn in 2014.

Despite its efforts, the company's profits had fallen short of initial expectations amid demand, particularly in the plant-based food sector.

Analyst estimates compiled by Bloomberg indicated that the nutrition segment's operating income was expected to decline by over 18% in 2023, reaching its lowest level since 2020.

In November, ADM appointed Ian Pinner, a long-time executive, to lead the struggling nutrition business.

As a result of the ongoing investigation, ADM said it was withdrawing its outlook for the nutrition unit and anticipated a delay in its fourth-quarter and full-year earnings release.

The company previously predicted full-year profits exceeding $7 per share, but now anticipated adjusted earnings per share of above $6.90 for the year ended 31 December.

"The board takes these matters very seriously and will continue to work closely with ADM's advisors to identify the best path forward and ensure ADM's processes align with financial governance best practices," said Terry Crews, lead director at ADM, in the company's statement.

ADM is no stranger to controversy, with Bloomberg noting its involvement in a price-fixing conspiracy during the 1990s, which served as the basis for the 2009 film The Informant.

In 1996, the company pleaded guilty to price-fixing charges.

It was also currently dealing with various lawsuits related to allegations of price manipulation in its trading of cotton and ethanol.

Reporting by Josh White for Sharecast.com.