ADM stock price falls amid SEC investigation

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CHICAGO — ADM’s stock experienced a sharp decline on Jan. 22 after the company announced that its chief financial officer, Vikram Luthar, had been placed under administrative leave amid an investigation into accounting practices in its nutrition segment. 

ADM’s stock opened at $56.88 on Jan. 22, down16.6% from its previous close of $68.19 on Jan. 19. The stock price continued to decline and traded at a 52-week low of $52.46 in mid-morning trading on Jan. 22.

Luthar has been placed on administrative leave following a Securities and Exchange Commission (SEC) “voluntary” request for documents. ADM’s outside counsel and board audit committee are looking at accounting practices in its nutrition segment, including intersegment transactions. Luthar was promoted to CFO in April 2022 and has been with ADM since 2004.

Ismael Roig, an executive who was president of both Europe, Middle East and Africa operations and president of animal nutrition at ADM, has been named interim CFO. He has been with ADM since 2004. Prior to ADM he spent 11 years with General Motors Corp. in various treasury, finance and controller positions.

“The board takes these matters very seriously,” said Terry Crews, lead director, ADM. “Pending the outcome of the investigation, the board determined that it was advisable to place Mr. Luthar on administrative leave. The board will continue to work in close coordination with ADM’s advisers to identify the best path forward and ensure ADM’s processes align with financial governance best practices.”

Roig said he would be working in partnership with the team at ADM to move forward, despite the SEC’s probe.

“I look forward to working closely with the management team and board, including the audit committee, as we resolve this matter and continue to drive value for our stockholders and customers,” he said.

ADM’s nutrition segment accounted for $468 million of the company’s $4.67 billion operating profit through the first nine months of the year. ADM’s outside counsel and board audit committee are looking into accounting practices in its nutrition segment, including intersegment transactions. 

The company also missed profit expectations, reporting adjusted earnings per share of above $6.90 for the fiscal year, which is lower than the $7.27 expected by analysts. ADM’s ag services and oilseeds and carbohydrate solutions units will report results in line with expectations it gave in the third quarter, according to the company.

ADM’s stock has fallen 19% over the last year, while the S&P 500 has gained 22%. The stock’s 52-week high is $87.30, while its 52-week low is $52.46.

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The Israel-Hamas war is affecting traveler confidence and bookings

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The Israel-Hamas war is affecting travel across the Middle East and beyond.

International arrivals to the region grew in the fourth quarter of 2023 — mainly owing to an increase in visitors to Saudi Arabia — to a level that matched 2019 numbers, according to the travel data company ForwardKeys.

But it’s a far cry from the 30% rise in inbound travelers the region was expecting compared to 2019 levels, based on the number of airline tickets purchased before the Oct. 7 attack on Israel, the company said.  

The outlook for 2024 doesn’t look much different.

“The forward-looking situation for arrivals to the Middle East in the first quarter of 2024 as of 6 Oct. — the day before the recent conflict started — was very positive, with tickets issued up by 49% vs pre-pandemic levels,” said Olivier Ponti, the company’s vice president of insights. “Fast-forward to 5 Jan. … with tickets issued now up by just 9% vs. 2019.”

Data showed air tickets to the Middle East purchased after the war fell 6% from 2019, with purchases to the United Arab Emirates down 8%, Morocco 15%, Turkey 17% and Egypt 21%. Tickets to Jordan were affected the most, falling 50% from 2019 levels, according to ForwardKeys.

Canceling plans a continent away

Yet, the war’s effect on travelers extends far beyond the Middle East, according to a survey from Morning Consult.

The data research company surveyed some 2,200 Americans in November, with one in five people saying they have delayed, rescheduled or canceled a travel booking as a direct result of the Israel-Hamas war. 

Respondents said these plans included visits to the Middle East (12%) and North Africa (7%), as well as Western Europe (14%), according to the survey. However, the bulk of the cancelations — 41% — were for trips within the United States, the survey showed.

Cancelations were high for domestic trips because most Americans travel within the 50 states, thus “there are simply more trips on the table to disrupt,” the report stated.

But as to why the war is making Americans feel uneasy about traveling in their own country, the report stated: “This is also emblematic of the larger tensions — for example, concerns related to antisemitism and Islamophobia — stoked by the conflict, and peoples’ resultant apprehension to venture far from home.”

Following Hamas’ attack on Israel on Oct. 7, tensions spilled over to college campuses, workplaces and suburban neighborhoods, with many countries reporting a rise in hate crimes against Muslims and Jewish people.

A worldwide travel advisory, issued by the U.S. State Department less than two weeks following Hamas’ attack on Israel, may have affected traveler confidence as well, the report stated. Some 62% of respondents said they knew about it.

Worldwide Caution

“Due to increased tensions in various locations around the world, the potential for terrorist attacks, demonstrations or violent actions against U.S. citizens and interests, the Department of State advises U.S. citizens overseas to exercise increased caution.” — U.S. Travel Advisory issued on Oct. 19, 2023

In addition to weather and natural disaster alerts, the U.S. State Department Bureau of Consular Affairs’ account on X, formerly Twitter, has pushed out numerous security alerts in the months following the Hamas attack — for Cyprus, Egypt, Jordan, Lebanon, Kuwait and Turkey, among others — as well as demonstration alerts for cities in Turkey, Malaysia, Colombia, Oman, Egypt, South Africa, the United Kingdom, Poland and Denmark, some connected to rising anti-U.S. sentiment over the war.

U.S. domestic travel in the fourth quarter of 2023 fell below 2019 levels, according to ForwardKeys. The downturn happened after the outbreak of the war, the company said.

The day before the attack, the travel outlook for U.S. domestic travel in the fourth quarter of 2023 was positive (+4%), but it ended down (-5%), “highlighting the impact of the ongoing conflict in Israel,” said Ponti.

More feel unsafe

Numerous reports indicate Muslims and Jewish people worldwide no longer feel safe.

Morning Consult’s survey indicated those who know about the war may be feeling less safe as well.

Some 52% of respondents with knowledge of the war said they viewed traveling to the Middle East as “very unsafe,” compared to 29% of those who had not heard about it.  

Those who had heard about the war also indicated that they felt less safe traveling to North Africa and Eastern Europe too, the survey showed.

Zicasso’s 2024 Luxury Travel Report named geopolitical conflict as one of the three most significant obstacles to booking travel this year.

In a survey of 200 global travel specialists, 18% said uncertainty and safety issues in certain regions may discourage travelers from booking.

“After the October events in the Middle East, we did see a significant fall-off in trip requests to Israel and the surrounding region,” said Zicasso’s CEO Brian Tan. “Typically, when travelers have second thoughts about overseas travel to a certain region due to obstacles such as geopolitical conflict, we find that travelers will redirect to other international destinations.”

He said the war in Ukraine hasn’t materially affected business since Zicasso doesn’t receive many requests for bookings there, but that his company is carefully watching the situation in Ecuador, where gang violence erupted last week.  

Tan noted that his company has seen a recent rise in trip requests for Morocco, which he noted is thousands of miles from Jerusalem.

Yet, according to Morning Consult, the Israel-Hamas war could reduce travel interest to the region “for months and even years to come.”

   

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