The first quarter of 2011 included a 75¢ per share gain as a result of a payment from the government of Mexico pursuant to a settlement in the company's favor regarding a North American Free Trade Agreement (NAFTA) dispute and 6¢ per share of acquisition integration charges. The first quarter of 2010 included 4¢ per share of restructuring charges related to the Chilean earthquake and 2¢ per share of acquisition costs.
"Corn Products delivered a very strong first quarter as we benefited from good performance across the entire business including the recently acquired National Starch," said Ilene Gordon, chairman, president and chief executive officer. "These results reflect the strength of our business model which takes a regional approach with a global perspective combined with a prudent commodity risk management philosophy to deliver long-term performance. Looking ahead, we continue to expect another year of earnings growth. We also plan to continue to invest in our business for future growth through capital expansions in key markets like Brazil, cost savings programs, and new product development leveraging our acquired R&D capability."
First quarter net sales rose 56% from $937 million to $1.46 billion. The company attributed the increase to higher volume of $351 million which was largely a result of the incremental $348 million of sales associated with the National Starch business. Higher selling prices contributed $149 million and $22 million was a result of favorable foreign exchange.
Gross profit increased by 109% in the first quarter from $143 million to $298 million, expanding the gross profit margin from 15.2% in the year ago period to 20.4% this year. The improvement was driven by the addition of the National Starch business and the growth in legacy Corn Products operations.
First quarter operating income was up 217% from $72 million to $227 million. The change was driven by the $58 million related to the NAFTA settlement, and the remaining change was almost evenly split between incremental operating income from the National Starch business and organic growth.
Adjusted operating income rose 127% from $78 million to $176 million in the first quarter 2011. The first quarter 2011 included $58 million related to the NAFTA settlement and $7 million of integration costs. The first quarter 2010 included $3 million of acquisition costs and $3 million of restructuring related to the Chilean earthquake.
The company also realized $6 million of integration synergies generated by lower pension costs and procurement savings in the first quarter 2011.