WESTCHESTER, ILLINOIS, U.S. — Ingredion Inc. reported on Oct. 30 that earnings for the third quarter of 2013 fell 28% to $86.3 million, or $1.10 per share, from year-ago adjusted earnings of $118.2 million, or $1.52 per share, mostly due to challenges in South America.
“This was a disappointing quarter as many of the headwinds we faced in the second quarter persisted and in some cases accelerated. These challenges included volume softness, currency headwinds and higher costs,” said Ilene Gordon, chairman, president and chief executive officer. “Notably, two-thirds of the decline in operating income in the quarter was a result of the challenges in South America, particularly Argentina. Conditions remain very challenging in Argentina as political and economic actions have significantly increased costs while our ability to price through higher costs continues to be constrained.”
Ingredion also announced Chief Financial Officer and Executive Vice-President Cheryl Beebe has decided to retire due to family health issues. Her retirement will be effective Jan. 6, 2014.
Jack Fortnum, currently president, North America, was named as Beebe’s replacement. He started with Ingredion’s former parent company in 1984. James Zallie, currently president Asia Pacific and EMEA, will succeed Fortnum as president, North America.
Ingredion said third quarter sales were down 4% with volume declines and currency devaluations offsetting price/mix improvements. Operating income for the quarter was down 19% to $137 million. The decline was due to a drop in operating income in South America, due to higher costs and weaker volumes.
Earnings per share for 2013 are expected to be in the range of $5-$5.15, Ingredion said, compared to adjusted earnings of $5.57 and prior guidance of $5.10-$5.40.
The updated guidance anticipates ongoing cost pressures in Argentina, a generally soft consumer environment leading to volume softness across all regions, currency headwinds in Argentina and Brazil, and an effective tax rate of 27%.
“In the face of economic challenges, volume softness and the impact of last summer’s drought in the U.S., our total business has held up well. And, looking longer-term, our early outlook for 2014 remains positive as we expect relief on raw material prices, improved volume performance, and sales and operating income from key capital investments,” Gordon said.