Corn Products net falls 85% in '09
Februray 2, 2010
by Eric Schroeder
WESTCHESTER, ILL. — Net income at Corn Products International, Inc. fell 85% in the fiscal year ended Dec. 31, easing to $41.1 million, equal to 55c per share on the common stock, from $267.2 million, or $3.59 per share, in fiscal 2008. Despite a strong second half, full-year results were hurt by soft volumes and higher net corn costs during the first half, Corn Products said. In addition, the 2009 results included an after-tax impact of impairment and restructuring charges of $1.47 per share.
Sales for fiscal 2009 fell to $3,672 million from $3,943.6 million.
The weaker full-year results were in contrast to a strong fourth quarter in which Corn Products’ earnings rose 21% to $56.3 million, or 75c per share, which compared with $46.4 million, or 62c per share, in the same quarter a year ago. Net sales in the fourth quarter were up 7% to $958.6 million.
“As the fourth quarter confirms, 2009 was a year of two halves,” said Ilene Gordon, chairman, president and chief executive officer. “The first half was marked by soft volumes, higher net corn costs, unfavorable foreign currencies, and the write-off of goodwill in our Korean business. The second half showed marked improvement as we worked through the higher corn costs, foreign currencies turned in our favor and volumes began to recover.
“Throughout the year we remained focused on execution, managing costs and preserving financial flexibility. Our team’s efforts are clearly visible in the quarter-by-quarter earnings improvement and in our balance sheet. During 2009 we generated $586 million in cash flow from operations and applied $332 million to dept repayment. At the same time, we maintained our dividend and stayed committed to our future growth by investing $141 million in capital back into the business.”
In North America, operating income in fiscal 2009 was $176.8 million, down 44% from $313.2 million during fiscal 2008. Sales for the full year were down 4% to $2,268.4 million, which compared with $2,369.4 million during fiscal 2008. Corn Products said the lower earning reflected the reduction in co-product sales values, higher corn costs, lower volumes and a weaker Canadian dollar.
Operating income within the South America division eased to $137.9 million, down 9% from $150.8 million in fiscal 2008. Sales fell 10% to $1,012.1 million.
In Asia/Africa, operating income in fiscal 2009 was $16.9 million, down 56% from $38.4 million. Sales fell 14% to $391.5 million, down from $453.9 million.
Looking ahead, Corn Products said it expects 2010 diluted earnings per share to be in the range of $2.25 to $2.60, which compared with 2009 diluted e.p.s. of 54c.
“While the North American business environment remains challenging, we expect modest volume growth in North America driven by sweetener sales in our Mexican business,” Ms. Gordon said. “North America contracting was largely completed by 2009 year-end. Soft demand and lower corn costs resulted in lower pricing and a low single-digit reduction in spreads; however, we expect North America gross profit and operating income to improve on higher volumes and manufacturing efficiencies.”