Ingredion headquarters
Ingredion's net income in the year was up 7% from fiscal 2016.

WESTCHESTER, ILL. — Earnings and sales at Ingredion, Inc. posted solid year-over-year gains in fiscal 2017, boosted in part by record operating income in North America.

Net income in the year ended Dec. 31, 2017, totaled $519 million, equal to $7.21 per share on the common stock, up 7% from $485 million, or $.670 per share, in fiscal 2016. Net sales increased 2%, climbing to $5,832 million from $5,704 million.

The strong financials were driven by record operating income of $661 million in North America, an increase of 8% from $610 million in fiscal 2016. Sales in North America also were higher, increasing 2% to $3,529 million from $3,447 million.

Jim Zallie, Ingredion
James Zallie, president and c.e.o. of Ingredion

“The TIC Gums integration is further enhancing our texture capabilities and enabling us to deliver custom solutions faster to innovative small and medium-sized customers,” James P. Zallie, president and chief executive officer, said during a Feb. 1 conference call with analysts. “We are pleased with our profit growth as we continue to focus on our trade-up strategy, underpinned by our emphasis on the customer experience.”

Ingredion’s gains extended beyond North America, though, as operating income in the company’s EMEA region increased 7% to $113 million in fiscal 2017, while income in Asia Pacific edged up 1% to $112 million from $111 million.

“Our Sun Flour rice ingredients business and Shandong Huanong integrations are going well,” Mr. Zallie said. “The demand for our rice-based ingredients is strong, and our Shandong cost synergies are on track for 2018.”

TIC Gums innovation center, Ingredion
Ingredion's TIC Gums integration is enhancing the company's texture capabilities.

Operating income in the company’s South America business was down 10% for the full year at $80 million, but showed signs of growth in the fourth quarter by increasing 24% year-over-year to $36 million from $29 million.

“We have been working to get our cost structure really, I would say, ‘fighting fit’ for the last couple of years,” Mr. Zallie said. “We have a very strong operator down in South America that is driving operational efficiency, continuous improvement. We’ve taken actions … to restructure our network and the actions that we took last year in Argentina. So really great to see how we’re positioned now that we see some green shoots in Brazil that appeared to be sustainable going forward. Probably the second straight quarter that we’ve seen positivity out of Brazil. And then Argentina, again, we’re very well positioned as that economy continues to recover. And we’ve got a very strong position in Colombia and the Indian region. So I would say we’re certainly more optimistic on South America than we have been in recent years.”

Looking ahead to fiscal 2018, Mr. Zallie said Ingredion expects continued growth in its specialty portfolio, disciplined cost management and ongoing capital investments to support margin expansion. The company also will continue to explore potential mergers and acquisitions to drive specialty growth.

James Gray, Ingredion
James Gray, c.f.o. of Ingredion

James D. Gray, chief financial officer, noted during the call that Ingredion expects 2018 adjusted earnings per share in the range of $8.10 to $8.50, which would include the estimate benefit of tax reform of approximately 1 percentage point.

Meanwhile, Ingredion anticipates cash from operations in 2018 to be in the range of $830 million to $880 million, Mr. Gray said.

“We expect to invest between $330 million and $360 million in capital expenditures around the world in 2018 to support growth as well as cost and process improvements,” he said. “Importantly, we have a proven track record of both reinvesting and returning capital to shareholders through dividends and share repurchases, and we expect to continue this in the future as we concurrently explore M.&A. opportunities.”