The Chicago-based agricultural commodities trader is promising a turnaround as it undergoes a federal investigation of its accounting practices.
It took just one day for Archer-Daniels-Midland Co. to lose more than $8 billion in value following news of an investigation into its accounting practices earlier this year. Bouncing back will take a lot longer.
“ADM is going to have to show that the nutrition business can grow,” said Seth Goldstein, an analyst at Morningstar Inc. “They need to show profit growth and margin restoration back closer to what we saw in 2021, 2022.” ADM’s growth strategy centered around human and animal nutrition. It spent $3 billion to acquire Wild Flavors GmbH and another $1.8 billion to take over animal-feed maker Neovia, the company’s largest-ever deals. But that bet has largely failed to live up to expectations, due in part to faltering demand for plant-based ingredients and animal feed.
Probes by the U.S. Securities and Exchange Commission and the Department of Justice center around transactions between the nutrition business and other segments. After ADM’s own internal investigation, the company has reinstated some intersegment results for the past several years. “Some investors have written into their proxies or their bylaws that they might be restricted from buying stock while the company is under investigation,” he said. “But also during the investigation the company is not able to answer every question about the business directly. As long as that’s the case, there’s going to be a certain amount of investors who can’t buy the stock.”
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