The Financial Times’ Stephen Foley reported Tuesday that “Archer Daniels Midland, the global agricultural commodities merchant, overstated historical profits at its fast-growing nutrition business by up to 10 percent, it said on Tuesday, setting out for the first time the details of an accounting probe that led to its chief financial officer being put on leave.”
“The misstatements did not affect the company’s reported profits or cash flows overall, but flattered the profits of the nutrition business, often significantly,” Foley reported. “Executive bonuses since 2020 were tied in part to the performance of the business, but the company said payouts were not affected by the misstatements.”
“In 2022, the most heavily affected year, the profit of the nutrition business was cut by $68 million to $668mn and the profits of the agricultural services and carbohydrates divisions raised commensurately,” Foley wrote. “In 2023, the real profit of the nutrition business was $427mn instead of $458mn, it said. The company took a $137mn impairment charge to reflect the lower value of the business.”
The Accounting Investigation In late January, the Associated Press reported that “an accounting investigation is under way at Archer Daniels Midland and the top financial executive at the agribusiness giant has been placed on administrative leave. The company postponed the release of its annual and quarterly financial reports that were scheduled for Tuesday and shares of the Chicago company tumbled 24% Monday.”
“Archer Daniels Midland Co. said it’s working with outside counsel and the audit committee of the company board to complete an investigation of accounting practices within its nutrition business and it pulled guidance for the unit,” the Associated Press Reported in January.
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