Ingredion's third-quarter earnings increase

by World Grain Staff
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WESTCHESTER, ILLINOIS, U.S. — Ingredion Inc. reported on Oct. 30 that third-quarter net income attributable to the company increased to $118.6 million or $1.60 per share from $86.3 million or $1.10 per share in the same quarter a year ago.

"We delivered a strong third quarter that reflects continued momentum in our business," said Ilene Gordon, chairman, president and chief executive officer.  "All four regions delivered double-digit operating income growth, largely driven by solid volume growth, and expanded dollar margins through effective pricing and cost management.

"In addition, we have been actively executing against our strategic blueprint, as evidenced by our recently announced acquisition of Penford Corp., for approximately $340 million, to enhance our specialty ingredient portfolio.  We also announced our intention to invest approximately $100 million in capital to drive further organic growth by expanding our manufacturing capacity for specialty ingredients. A critical part of our strategy is effective deployment of cash.  In addition to the pending Penford acquisition, our current accelerated share repurchase program, for approximately $300 million, will contribute to diluted earnings per share accretion going forward.

Third quarter overall operating income increased 30% to $178 million compared to $137 million in the same period a year ago.

"Overall, we expect our current business momentum to carry into the fourth quarter.  We have been progressively overcoming a slow start in 2014,” Gordon said.  “While we do not believe we will make up for all the challenges we faced earlier this year, our performance trajectory and recent strategic actions position us well for the future."

2014 EPS is expected to be in a range of $5.35 to $5.50 compared to $5.05 in 2013. The guidance anticipates North American operating income will be down for the full year.

Ingredion said the momentum has been good in the second and third quarters in North America, but it does not expect to compensate for the slow start to the year. In line with previous guidance, Ingredion expects continued cost pressures in Argentina and softness in the Brazilian economy to result in South America being down slightly for the year. Also in line with previous guidance, operating income in Asia Pacific and EMEA is expected to be up.

The guidance also reflects slightly lower anticipated financing costs compared to last year and an estimated effective tax rate of 27% to 28%. Cash generated by operations is expected to be $700-$750 million in 2014. Capital expenditures in 2014 are now anticipated to be slightly below $300 million. These investments will support growth and cost reduction actions across the organization, Ingredion said.

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