Ingredion earnings down 9% in 2013

by World Grain Staff
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WESTCHESTER, ILLINOIS, U.S. — Ingredion, Inc. on Feb. 6 reported that adjusted earnings per share (EPS) for 2013 declined 9% to $5.05. 

“We concluded 2013 on a positive note as we delivered a quarter largely in-line with our expectations,” said Ilene Gordon, chairman, president and chief executive officer. “Notably, Asia Pacific achieved volume and operating income growth in the quarter and record operating income for the full year, and South American volumes in the quarter were positive for the first time this year. These positives were offset by continuing cost pressures and foreign exchange headwinds in South America, particularly Argentina, as well as volume softness in North America that led to unfavorable fixed cost absorption.”

For the year, sales were down 3% as volume declines and currency devaluations more than offset price/mix improvements. Operating income at $613 million was down 8% compared to 2012. The decrease was primarily due to higher costs and weaker volumes, Ingredion said.

Notably, $82 million of the $88 million decline in adjusted operating income was attributable to South America, the company said. 

“As we look ahead to 2014, we expect to return to earnings per share growth. In 2014, the primary drivers of the bottom line growth should be improved performance in all four regions. We will also benefit from the accretion derived from our significant share repurchase late in 2013,” Gordon said. 
 
2014 EPS is expected to be in a range of $5.35 to $5.75 compared to $5.05 in 2013. The guidance anticipates ongoing cost pressures and currency headwinds in Argentina; a challenging environment as sugar prices remain low; and, an effective tax rate of 27%-28%. All four regions are expected to deliver increased operating income. However, as a result of lower input costs, sales are expected to drop significantly for the total company. 
 
Cash generated by operations is expected to be approximately $700-$750 million in 2014. Capital expenditures in 2014 are anticipated to be approximately $300-$350 million. 


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