Ingredion earnings rise 10% in second quarter

by World Grain Staff
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Ingredion facility in Mexico
Overall net sales at Ingredion were up narrowly in the second quarter to $1.46 billion as a result of improved price/mix in North America and South America and a more favorable product mix in both specialty and core ingredients. 
 
WESTCHESTER, ILLINOIS, U.S. — Ingredion, Inc. delivered another strong quarter of growth as net income in the second quarter ended June 30 increased 10% to $117.2 million, equal to $1.62 per share on the common stock, up from $106.7 million, or $1.49 per share, in the same quarter a year ago.

For the first six months of the year Ingredion posted earnings of $247.7 million, or $3.44 per share, up 30% from $190.3 million, or $2.66 per share, in the same period a year ago.

Ingredion CEO llene Gordon
Ilene Gordon, Ingredion's president and chief executive officer.
“We delivered another strong quarter with solid operating income and earnings per share,” said Ilene Gordon, president and chief executive officer (CEO). “More favorable price/product mix across the portfolio, as well as margin expansion propelled by our global optimization efforts all contributed to increases in profitability. North America, Asia Pacific and EMEA achieved record operating income for the quarter while operating income was lower in South America as that region faced macroeconomic and foreign-exchange headwinds.

“As we continue to execute our strategic blueprint, we expect a strong year and are raising our anticipated 2016 adjusted EPS, now to a range from $6.70 to $6.90.”

Overall net sales at Ingredion were up narrowly in the second quarter to $1.46 billion as a result of improved price/mix in North America and South America and a more favorable product mix in both specialty and core ingredients. These factors were offset predominantly by changes in foreign currency exchange rates and organic volume declines attributable to the sale of the company’s Port Colborne, Canada, facility and macroeconomic headwinds in South America. Year-to-date net sales were up 1% to $2.82 billion as a result of improved price/mix in North America and South America, a more favorable product mix in both specialty and core ingredients, as well as acquisition-related growth.

Second quarter reported and adjusted operating income were $198 million and $211 million, respectively. These were 15% and 17% increases, respectively, compared to $173 million of reported operating income in the second quarter of 2015. The increases in operating income were primarily due to better price/product mix in both specialty and core ingredients and reduced costs resulting from global optimization efforts. These positives were partially offset by the negative effect of foreign exchange and macroeconomic headwinds in South America, Ingredion said.

Year-to-date 2016 reported and adjusted operating income were $398 million and $412 million, respectively. These were 28% and 22% increases, respectively, compared to $312 million of year-to-date 2015 reported operating income and $337 million of year-to-date 2015 adjusted operating income. The increases in operating income were primarily due to a better price/product mix in both specialty and core ingredients, acquisition-related growth, and reduced costs resulting from global optimization efforts.

North America’s second quarter operating income increased to $160 million from $127 million. Better price/product mix in specialty and core ingredients, cost synergies related to Ingredion’s acquisition of Penford, as well as operational efficiencies driven by network optimization efforts accounted for the increase, the company said.

South America’s operating income in the second quarter was $14 million, down $6 million from a year ago. The decline primarily reflected lower volumes in the Southern Cone driven by macroeconomic headwinds, and higher costs for corn and other inputs.

Operating profit in Asia Pacific during the second quarter totaled $30 million, up $2 million from a year ago. The increase reflected volume growth and margin expansion that partially was offset by foreign exchange impacts.

Europe, Middle East and Africa’s second-quarter operating income was $29 million, up $6 million from a year ago. Higher volumes and margin expansion more than offset foreign-exchange impacts.

Ingredion said its 2016 adjusted EPS is expected to be in the range of $6.70 to $6.90, which compared to adjusted EPS of $5.88 in 2015. The company said the guidance assumes overall improvement in North America, Asia Pacific and EMEA, and South America down slightly given the macroeconomic environment; an effective tax rate of 30% to 32%; and continued trade up in the company’s portfolio.

In 2016, cash generated by operations is expected to be approximately $725 million to $775 million and $300 million, and capital expenditures are expected to be $300 million, Ingredion said.
 
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