Ingredion sees fall in sales, income

8 May 2019

Ingredion has reported results for the first quarter 2019. Net sales were down 3% to $1,420 million. Net income was $102 million, down 29%.

“During the first quarter, our performance was challenged by continued unfavorable foreign exchange impacts, difficult raw material market conditions in North America, and continued macroeconomic weakness in South America," said Jim Zallie, Ingredion’s president and chief executive officer.

Ingredion sees fall in sales, income

"We are navigating this environment by taking aggressive pricing actions to pass through foreign exchange impacts and accelerating our $125 million Cost Smart savings program,” he continued. “We are strengthening our higher-value, starch-based texturizer portfolio by expanding capacity for future specialty growth with the acquisition of the Western Polymer business. Also during the quarter, we continued to advance our specialties growth strategy with the previously announced $200 million of investments in clean and simple ingredients, plant-based proteins and sugar reduction capabilities. We remain steadfast in leveraging these capabilities to deliver value through customer co-creation.”

“Given the challenging macroeconomic and market conditions, we have lowered the top end of our expected adjusted EPS guidance to be in the range of $6.80 to $7.20,” concluded Zallie.

The decrease in net sales was driven by unfavorable foreign currency impacts and lower core volumes, partially offset by favorable price/mix primarily due to pass-throughs for higher raw material costs and foreign exchange impacts.

The company expects 2019 adjusted EPS to be in the range of $6.80-$7.20 compared to adjusted EPS of $6.92 in 2018. Compared with last year, the 2019 full-year outlook assumes: North America operating income is flat to down assuming current market values for corn and corn by-products, which havebeen negatively impacted by crop inventory imbalances arising from a U.S. and China trade dispute; South America operating income is flat due to persistent macroeconomic challenges; Asia-Pacific and EMEA operating incomes are expected to be flat to modestly up; and continued higher-value specialty ingredients growth. The company expects operating income to be higher in the second half of 2019 relative to 2018, given the anticipated layout of corn costs in North America and anticipated impacts of foreign-exchange.