USA – Ingredion Incorporated, a leading global provider of ingredient solutions to diversified industries, has accelerated its Cost Smart program designed to improve profitability and deliver increased value to shareholders.
The company has accelerated the Cost Smart savings program by establishing a US$125 million target by year-end 2021 through reduction of Cost of Sales and SG&A expenses.
According to the company, it introduced this cost savings initiative, in its First Quarter 2018 Earnings Call on May 3, to further streamline its global business.
The company is also setting forth Cost Smart targets to include an anticipated US$75 million Cost of Sales savings, including global network optimization and US$50 million in anticipated SG&A savings by year-end 2021.
It also expects restructuring costs to be incurred earlier in the program and expects savings to be realized beginning in 2018 and building momentum toward the targets through 2021.
The company also reported that it will cease wet-milling operations at its Stockton, California facility and establish a shipping distribution station by year-end 2018. After the transition, it will begin using the facility to distribute finished products to customers in the Western United States, in particular California.
Currently, the facility produces high fructose corn syrup and industrial starch.
“We’re taking this necessary action to balance our capacity versus sweetener demand, focus future resource investment toward our specialty growth initiatives, and continue to deliver on our customer experience commitments,” said Jim Zallie, Ingredion president and chief executive officer.
The company also hopes to optimize the North America network by cessation of wet-milling at its Stockton facility are expected to save US$6 million – US$9 million and will reduce its fixed cost footprint.
Ingredion has driven a culture of continuous improvement and operational excellence for the last five years, which has improved efficiencies throughout its global operations.
“Establishing firm Cost Smart targets will ensure the most effective use of our resources to better navigate future cost pressures and ensure long-term shareholder value creation,” said Jim Gray, Ingredion executive vice president and chief financial officer.
“We remain steadfast in our efforts to operate efficiently and simplify our global business while mitigating the impacts of inflation.”
The company currently expects EPS and adjusted EPS of US$1.51 to US$1.59 and US$1.63 to US$1.68, respectively for the second quarter of 2018.
For the full-year, the company anticipates adjusted EPS of US$7.50 to US$7.80 in 2018, versus the previously anticipated US$7.90 to US$8.20.
In North America, it experienced lower than expected sweetener volumes sold into beverages and higher than expected manufacturing costs.