WESTCHESTER, ILLINOIS, U.S. — Ingredion Inc. reported on July 31 a 14% drop in earnings for the second quarter of 2013 due to weakness in South America.
The company reported a profit of $95.1 million, or $1.20 per share, compared to $109.1 million, or $1.40 per share, last year.
“After delivering very strong results on a consistent basis over many years, our second quarter was disappointing as we saw EPS fall and, as we previously announced, we brought down the outlook for our full year,” said Ilene Gordon, chairman, president and chief executive officer. “The shortfall and lowered outlook is the result of a challenging macro environment, particularly in South America where Argentina has seen a sharp acceleration of economic headwinds.”
Ingredion said sales were down in South America largely due to currency devaluations in Brazil and Argentina along with volume declines resulting from continued weak economic conditions.
Operating income in the quarter was $17 million, down 63%, or about $30 million. Favorable
price/mix was offset by higher raw material, energy and labor costs, currency devaluations and lower volumes.
2013 EPS guidance remains in a range of $5.10 to $5.40 compared to adjusted EPS in 2012 of $5.57 (2012 reported EPS was $5.47). The guidance anticipates ongoing cost pressures in Argentina; volume softness and currency headwinds in Brazil; a generally soft consumer environment; and, an effective tax rate of approximately 27% to 29%.
Cash generated by operations is expected to be approximately $700 million in 2013.
Capital expenditures in 2013 are anticipated to be in the range of $300 to $350 million, a $50 million reduction compared to previous guidance. The investment will support growth and cost reduction actions across the organization.