Archer Daniels Midland (ADM) stock is experiencing a rise following the company's announcement that its financial results will not be significantly impacted by an ongoing investigation into intersegment sales.
According to the Chief Executive, Juan Luciano, ADM is currently conducting an investigation into intersegment sales. This investigation involves the transfer of goods and related financial accounting between different business segments. Luciano emphasized in a message to employees, contained in a filing with the Securities and Exchange Commission, that while the investigation has delayed the closing of financial results, these sales do not have a material effect on the overall performance of the company.
In its recent filing, ADM predicts earnings of more than $6.90 per share for fiscal 2023. Although this falls slightly below the FactSet consensus of $7.05 per share, the company assures shareholders that its leverage in the fourth quarter of 2023 will remain at healthy levels similar to those in the previous quarter. Furthermore, ADM has announced an increased dividend of 50 cents per share, up from the previous 45 cents.
In relation to the investigation into the company's accounting practices, ADM has placed its Chief Financial Officer, Vikram Luther, on administrative leave since January 21. The investigation, carried out by external counsel and the board's audit committee, focuses on certain accounting practices and procedures within ADM's Nutrition segment, including specific intersegment transactions.
Additionally, it has been reported by Reuters that ADM will delay paying performance bonuses to some executives until financial statements are completed and audited. However, ADM has not yet responded to requests for comment on this report.
Despite the investigation causing a 24% drop in ADM's stock on January 22, shares are now seeing a 3.7% increase to $53.95 on Monday.