WESTCHESTER, ILL. — An ability to mitigate the impact of cost increases through multiple levers, including pricing and mix improvements, operational excellence and productivity initiatives served Ingredion well during the third quarter of fiscal 2023, said James P. Zallie, president and chief executive officer.
Net income for the quarter ended Sept. 30 was $158 million, equal to $2.39 per share on the common stock, up 49% from $106 million, or $1.61 per share, in the same period a year ago.
Quarterly sales increased to $2.03 billion, up narrowly from $2.02 billion the previous year.
In a Nov. 7 conference call with analysts, Mr. Zallie said Ingredion’s performance during the third quarter demonstrated the company’s diversity of its product portfolio, markets exposure and the strength of its business model.
“Both our core and specialties ingredients continue to be well positioned to address large and growing end markets in the geographies where we operate,” he said.
Mr. Zallie said the company experienced growth in its largest specialty category, texture solutions, during the third quarter. In addition, the company’s Food Systems platform “outperformed expectations” as Ingredion worked with customers to reformulate recipes to drive affordability, primarily in the European private label market, he said. Meanwhile, strong volume growth and expanded PureCircle margins were noted in the company’s Sugar Reduction segment, he said.
“Our core ingredients also showed resilience, with one of our largest markets, Mexico, delivering record third-quarter operating profit driven by volume growth across a range of food and beverage categories, where a robust economy is driving growing middle-class demand,” Mr. Zallie said. “In the US, we were also pleased to see solid demand for glucose as our production facilities ran at full capacity in the quarter, partially in response to higher sugar prices.”
In North America, the company’s largest business unit, third-quarter operating income was $171 million, up 36% from $126 million in the same period of 2022. Sales totaled $1.3 billion, an increase of 3% from $1.26 billion.
“The (sales) increase was driven by strong price/mix, as well as solid sales volumes across sweeteners and industrial ingredients,” James Derek Gray, executive vice president and chief financial officer, said during the conference call. “North America operating income was $171 million, up 36% versus last year, driven by favorable price mix, partially offset by higher input costs and lower volumes.”
Operating income in the South America segment was $32 million in the third quarter, down 33% from $48 million the previous year. Sales were $269 million, down 8% from $293 million a year ago.
“South America’s operating income was down 33% to $32 million, driven primarily by lower volumes and higher energy costs associated with our transition to renewable biomass in Brazil,” Mr. Gray said. “While we incurred upfront costs associated with this changeover, the long-term strategic supply of predictable energy and cost savings will be beneficial.”
For the nine months ended Sept. 30, Ingredion net income was $512 million, or $7.75 per share, up 35% from $378 million, or $5.69 per share, in the first nine months of 2022.
Sales for the nine-month period were $6.24 billion, up 5% from $5.96 billion.Ingredion said it now expects full-year sales to be up mid- to high single digits, reflecting softer sales volume. Cash from operations for fiscal 2023 is expected to be in the range of $650 million to $750 million, up from an earlier forecast of $600 million to $700 million. Full-year 2023 adjusted EPS guidance now is expected to be in the range of $9.05 to $9.45, up from $8.80 to $9.40, Ingredion said.