Ingredion Earnings Miss Estimate, Stock Dips

By Juliette Rocheleau
Medill Reports

Shares of Ingredion Inc. (NYSE: INGR), the food and industrial ingredient supply company based in Westchester, Ill., dropped 4.3 percent after the company reported earnings below analysts’ expectations for the fourth quarter ended Dec. 31, 2017.

Profit in the quarter rose 5.1 percent to $99 million, or $1.35 per diluted share, from $94 million, or $1.26 per diluted share, in the year-earlier quarter. Revenue rose 3 percent to $1.43 billion from $1.4 billion.

Ingredion reported a one-time charge of $23 million associated with the tax reform bill passed at the end of 2017. Excluding the charge, the company reported adjusted earnings per share in the fourth quarter of $1.73 per share, up from $1.67 in the year-earlier quarter, but below analysts’ expectation of $1.70 compiled by Yahoo Finance.

Ingredion Revenue and Profit

(Juliette Rocheleau/MEDILL)

In markets across North America, revenue was up 3 percent to $840 million from $813 million, and Asia Pacific, up 6 percent to $185 million from $174 million. Revenue decreased in South America, down 4 percent to $1 billion from $1.01 billion.

“We expect sales to rise across all four segments,” Morningstar analyst Andrew Lane wrote in a note to investors, although the company cautioned that any increase in South America sales would likely prove modest.

After working for years to get “fighting fit” in South American markets, the company expects increased political stability to motivate Ingredion profits in 2018, according to President and CEO James Zallie in a conference call.

“We’ve taken actions to restructure our network and the actions that we took last year in Argentina,” said Zallie. “We’re very well positioned as that economy continues to recover.”

Full-year profit rose 7 percent to $519 million, or $7.06 per diluted share, from $496 million, or $6.55 per share.

Adjusted earnings per share increased to $7.70 from $7.13.

Full-year revenues rose 2 percent to $5.83 billion from $5.7 billion in 2016.

Looking ahead, the company predicted that adjusted earnings for the full year will be in the range of $8.10 to $8.50 per share, compared with adjusted earnings of $7.70 in 2017, a “relatively wide” range, according to Stephens’ analyst Farha Aslam on a conference call. Zallie cited the potential unseen effects of a tapioca root shortfall experienced last year and other operational variables, including fluctuating inflation costs associated with manufacturing.

In New York Stock Exchange trading, the company’s shares fell to $137.44, down $6.20.

Photo at top: An array of spices (Joe mon bkk/Creative Commons).