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Ingredion posts strong fourth-quarter earnings

by and Gordon Voit
Feb 07, 2013


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Ingredion Inc. posted fourth-quarter earnings that were 17 percent higher than the year-ago period.

Food ingredient maker Ingredion Inc. reported increase earnings for the fourth quarter thanks to increased sales and prices. The boost came despite the nation’s worst drought since 1956, which sent the company’s input costs to years-long highs.

Ingredion finished the quarter with total earnings of $111.6 million, or $1.42 per diluted share, up 17 percent from $95.1 million, or $1.22 per share, in the year-ago period.

Meanwhile, sales increased nearly 6 percent to $1.64 billion from $1.55 billion.

Results were in line with the $1.42 per share estimate of analysts surveyed by Yahoo Finance.

For all of 2012, Ingredion earned $427.5 million, or $5.47 per diluted share, up nearly 3 percent from $415.7 million, or $5.32 per share, in 2011.

Annual sales increased 5 percent to $6.53 billion from $6.22 billion in 2011.

Sales rose in North America, Asia and the area encompassing Europe, the Middle East and Africa by 6 percent or more, the company said. However, sales fell 4 percent in South America, which the company attributed to a slow regional economy.

Ingredion faced significant price increases on commodities such as corn in 2012, but CEO Ilene Gordon said the company was able to mitigate the damage thanks to securing competitive contracts and price increases. The company has raised prices by $1.2 billion over the past two years and expects $500 million more in increases in 2013.

In the company’s conference call with analysts Thursday, Ingredion’s management was asked how the company would manage the decreasing premium on it corn-based sweeteners compared with sugar. CFO Cheryl Beebe said she was confident the company’s line of dextrose and glucose would remain competitive.

“Obviously, that margin has narrowed and come in quite close,” Beebe said. “Do I think that based on the contracting outcome, that it actually is trading at a – sugar is trading significantly better? The answer is no.”

Ingredion provided 2013 guidance. Company executives said they expect Ingredion to earn between $5.60 to $6.00 per diluted share. A group of analysts polled by Yahoo Finance is expecting the company to earn $5.83 per diluted share.

Citigroup analyst David Driscoll said that he interpreted the company’s low-end guidance of $5.60 per diluted share in earnings as the company anticipating a lack of growth.

“When you look at the $5.60, that would effectively say no growth versus what you did in 2012,” he said. “I think you’ve been pretty clear that your expectations are that the international side is where you’re supposed to get your profit growth in 2013 if it happens.”

The stock closed at $64.89, down 90 cents, or a decrease of 1.37 percent.