Agricultural giant Archer Daniels Midland (ADM) stunned the trading and processing world on Jan. 21 when it placed its CFO Vikram Luthar on leave and cut its earnings outlook pending an investigation into its accounting practices, according to Bloomberg. On Jan. 22 ADM shares plunged 24%, the most on record, wiping $8.8 billion from its market value.
Analysts say the probe highlights ADM’s struggle to expand beyond crop trading into the nutrition business, which began with a $3.1 billion acquisition of WILD Flavors in 2014. The nutrition operations have reportedly struggled with demand for changes in the formulation of products, including alternative protein used in veggie meats.
The nutrition division that is under investigation is responsible for less than 10% of ADM’s revenue, yet it has had an outsized influence on recent executive bonuses, records show. Bloomberg Opinion’s Javier Blas said the commodity giant must act fast to restore trust.