WESTCHESTER, ILLINOIS, U.S. ¬— Ingredion reported on Oct. 29 net income was $107.9 million or $1.48 per share, down 9% from $118.6 million or $1.60 in the same period last year.
“Our solid third quarter results reflect the overall positive trajectory of our business,” said Ilene Gordon, chairman, president and chief executive officer. “Higher core and specialty volumes, improved mix, good operating efficiency, and the impact of acquisitions, more than offset foreign-exchange headwinds. Year-over-year operating income improved in North America, South America, and Asia Pacific.”
Net sales were $1.43 billion, down 2% from $1.46 billion in the same period last year. Net sales were down as a result of changes in foreign currency-exchange rates and the pass through of lower corn costs, partially offset by volume growth, both organic and acquisition-related, and increased prices in South America which partially compensated for currency headwinds.
Ingredion’s total reported operating income was $175 million, a 2% decrease compared to $178 million in the same period last year. The adjusted operating income was $192 million or an 8% increase compared to 2014 third quarter.
Third quarter reported operating income was lower than adjusted operating income by $17 million. Of this, $12 million is related to Brazil restructuring; $2 million is related to severance-related charges for the sale of Ingredion’s plant in Port Colborne, Canada expected to close in the fourth quarter of 2015; and $3 million is for acquisition-related costs for Penford and Kerr.
North America’s third-quarter operating income increased from $113 million to $133 million. Higher organic and acquisition related volumes, lower corn costs, and lower manufacturing expenses due to operational efficiencies accounted for the increase. Year-to-date operating income increased from $289 million to $362 million. Higher organic and acquisition related volumes, lower corn costs, lower manufacturing expenses due to operational efficiencies, and nonrecurrence of costs attributable to the adverse weather effects in the first quarter of last year drove the increase.
Operating income for South America in the third quarter was $28 million, up4%, or $1 million, largely as a result of improved price/mix and good cost discipline, partially offset by the foreign-exchange impact and higher input costs. Year-to-date operating income was $73 million, down $1 million, largely as a result of the negative effect of foreign-exchange and higher input costs resulting from inflation. This was partially mitigated by improved price/mix.
The Asia Pacific region third quarter operating income was $28 million, up slightly from a year ago. Margin expansion was partially offset by foreign-exchange impacts. Year-to-date operating income was $81 million, up slightly from a year ago. Increased volume and margin expansion were partially offset by foreign-exchange impacts.
Third quarter operating income for Europe, Middle East and Africa was $22 million, down less than $1 million from a year ago. Year-to-date operating income was $67 million, down $2 million from a year ago. In both periods, good cost management was offset by foreign-exchange impacts and lower volumes.
“Our growth strategy continues to drive robust results and we remain confident in our 2015 outlook,” Gordon said. “Volume growth, disciplined cost management, and improved mix are expected to continue in the fourth quarter. Our Kerr acquisition, which broadens our wholesome and clean-label ingredient portfolio, was finalized in August and the Penford integration remains on track for at least $20 million in annualized cost synergies. We continue to take actions to optimize our cost structure for the future.”