Ingredion earnings dip amid struggles in South America

by Eric Schroeder
Share This:
Search for similar articles by keyword: [Ingredion]

WESTCHESTER, ILL. — A sharp decline in operating income in the company’s South American business bogged down second-quarter earnings at Ingredion Inc. Net income at Ingredion in the second quarter ended June 30 totaled $95.1 million, equal to $1.22 per share on the common stock, down 13% from $109.1 million, or $1.42 per share, in the same period a year ago. Quarterly results from fiscal 2012 included a 16c per share benefit from the release of a Korean deferred tax valuation allowance, which partially was offset by 8c of restructuring and impairment charges and 1c of business integration costs.

Non-GAAP adjusted net income in the second quarter of fiscal 2013 was $95.1 million, or $1.20 per share, which compared with $103.5 million, or $1.33 per share, in the same period a year ago.

Net sales during the second quarter of fiscal 2013 totaled $1,633.4 million, down narrowly from $1,635 million.

“After delivering very strong results on a consistent basis over many years, our second quarter was disappointing as we saw e.p.s. fall and, as we previously announced, we brought down the outlook for our full year,” said Ilene Gordon, chairman, president and chief executive officer. “The shortfall and lowered outlook is the result of a challenging macro environment, particularly in South America where Argentina has seen a sharp acceleration of economic headwinds.”

Operating income in the company’s North America segment increased 7% in the second quarter of fiscal 2013 to $103.9 million from $96.9 million in the same period a year ago. Net sales increased 3% to $976.8 million from $949.7 million.

In South America, operating income was $17.3 million, down 63% from $47.3 million. Dragging income down were higher raw material, energy and labor costs, as well as currency devaluations and smaller volumes. Net sales also were lower, falling 8% to $320.8 million from $349.1 million.

Operating income in Asia Pacific climbed 3% to $23.6 million from $22.9 million despite a 4% decline in sales to $200.2 million from $208.1 million.

In Europe, Middle East, Africa, operating income was $16.9 million, down 10% from $18.8 million a year ago. Net sales totaled $135.6 million, up 6% from $128.1 million in the same period of fiscal 2011.

For the six months ended June 30, overall net income was $205.8 million, or $2.65 per share, up 1% from $203.3 million, or $2.66 per share, in the same period a year ago. Net sales were $3,217.3 million, nearly flat compared with $3,209.2 million.

Despite the challenges, Ms. Gordon said Ingredion’s business model is positioned for near-term success in North America, Asia Pacific and E.M.E.A.

“We believe our current annual e.p.s. guidance for 2013 of $5.10 to $5.40 represents our best estimate on a variety of risk factors in our markets,” she said. “Looking longer term, our early outlook for 2014 is positive as we expect relief on raw material prices, improved volume performance, and sales and operating income from key capital investments.”

Capital expenditures in 2013 are now expected to be in a range of $300 million to $350 million, down $50 million from earlier guidance, Ingredion said.
Add a Comment
We welcome your thoughtful comments. Please comply with our Community rules.








The views expressed in the comments section of Baking Business News do not reflect those of Baking Business News or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.