WESTCHESTER, ILL. — Textures and emulsifiers are two components of Ingredion Inc.’s expansive specialty portfolio that are performing well, Ilene S. Gordon, chairman, president and chief executive officer of the Westchester-based company told analysts during a May 3 conference call to discuss first-quarter results.
“I would say as a leader in textures, we continue to be able to deliver a lot of recipes with texture,” Ms. Gordon said in response to an analyst’s question about what areas of the business are strong right now. “And this can be in anything from dairy to baked goods.”
Thanks to the recent integration of the Sun Flour Industry rice business, Shandong Huanong Specialty Corn and TIC Gums, Ingredion has been able to find uses for a variety of raw materials to meet customer needs, Ms. Gordon said. Specifically, she mentioned rice, potato starch, cassava and corn.
“The texture area, I think, continues to do very well,” she said.
Emulsifiers are another area where Ingredion is seeing growth, Ms. Gordon said.
“As beverages are diversifying, whether it’s flavored water or other types of juices, our emulsifiers are a key ingredient in many of those applications,” she explained. “So I think again it’s all about the consumer trends of healthy eating that continue to go.”
James D. Gray, chief financial officer and executive vice-president, added that the company has been working to expand its non-bioengineered line of offerings as well.
“Obviously, we have a lot of experience in non-G.M.O. starches,” he said. “We’ve been working on non-G.M.O. syrups, and we’ve made some really nice progress there over the last 1.5 years, and that’s kind of a very exciting and interesting area for us as well.”
Ingredion in the first quarter ended March 31 had net income of $124 million, equal to $1.72 per share on the common stock, down 5% from $130 million, or $1.81 per share, in the same period a year ago. Net sales of $1,453 million were up 7% from $1,360 million in the previous year’s first quarter, driven by volume growth in all four regions, continued specialty growth and changes in foreign currency exchange rates.
In the first quarter in North America, operating income was $160 million, up 7% from $149 million in the previous year’s first quarter, and net sales were $881 million, up 5% from $841 million.
“Continuous improvement initiatives and lower input costs continue to drive good operational efficiencies throughout the region,” Ms. Gordon said. “The TIC Gum's integration is under way, further enhancing our texture capabilities and enabling us to deliver custom solutions faster.”
Ingredion’s South America region in the first quarter posted operating income of $14 million, down 22% from $18 million, and sales of $255 million, up 19% from $215 million.
“The macroeconomic conditions continue to be challenging in the Southern Cone, especially in Argentina,” Ms. Gordon said. “Pricing actions, good cost discipline and continuous improvement projects partially offset higher corn operating and other input costs. We implemented organizational restructuring actions in Argentina to continue to right-size the business. The Southern Cone economy remains challenging as economic measures lowered consumer disposable income and continue to affect our margins. We continue our focus on all executable activities of the business, including cost containment in a high wage inflationary environment.”
The Asia Pacific region had operating income of $30 million, up 7% from $28 million, and net sales of $179 million, up 6% from $169 million. The Europe, Middle East and Africa region had operating income of $28 million, up 8% from $26 million, and net sales of $138 million, up 2% from $135 million.Ingredion, in providing guidance for the full year, said adjusted earnings per share should be in the range of $7.50 to $7.80 for fiscal 2017, which would be up from $7.13 in fiscal 2016.