USA — American multinational ingredient provider Ingredion, Inc., saw higher corn costs, a slower ramping up of plant protein production facilities than expected and, in the fourth quarter, higher transportation costs eat into its profits for 2021.
A 15% increase in net sales still allowed the Westchester-based producer of starch, modified starches, and starch sugars to turn a profit in the fiscal year ended Dec. 31, 2021.
Net income attributable to Ingredion plunged 66% to US$117 million, from US$348 million in the previous fiscal year.
A net asset impairment charge related to the contribution of Ingredion’s Argentine assets to the Arcor joint venture drove down operating by 47% to US$310 million from US$582 million.
Net sales of US$6.89 billion were up from US$5.99 billion driven by growth in specialty ingredients in each of Ingredion’s four geographic regions.
Specialty ingredients now represent 33% of global net sales, said James P. Zallie, president and chief executive officer, in a Feb earnings call.
“Asia Pacific led our specialties growth driven by our sugar reduction growth platform with PureCircle performing exceptionally well,” he said.
“Tapioca and rice-based starch texturizers also contributed to the strong performance in the region.”
In North America, operating income of US$487 million was flat when compared to the previous year as favorable price mix and higher volumes were fully offset by higher corn and input costs.
The Vanscoy delays, the slower ramping up of production in South Sioux City, and higher pea costs also resulted in an operating loss of about $40 million in 2021, he said.
In South America, operating income rose 23% to US$138 million as favorable price mix more than offset higher corn and input costs while net sales jumped 15% to $1.06 billion.
In Asia Pacific, operating income increased 9% to $87 million mainly driven by favorable price mix and year-over-year improvement in PureCircle. Net sales increased 23% to $997 million.
In Europe, the Middle East, and Africa, operating income increased 4% to US$106 million, largely attributable to favorable price mix in Pakistan and higher volumes in Europe. Net sales increased 19% to $703 million.
Mr. Zallie said that 2021 was every bit as challenging as the first year but the perseverance and agility of his team enabled the company to meet strong customer demand and deliver another year of significant growth.
“We overcame nearly US$900 million of input cost inflation, successfully integrated two acquisitions, entered into two strategic joint ventures and continue to invest almost US$100 million of capital in organic specialty growth.”
Ingredion in 2022 expects adjusted earnings per share (EPS) to be in the range of $6.85 to $7.45, which would compare to adjusted EPS of $6.67 in 2022.
The company is also upbeat about its North American operations and projects net sales to be up 10% to 15%.
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