Ingredion posts slight growth in Q3 sales, lowers earnings guidance amid trade uncertainties

USA – Ingredion reported a slight growth in sales to US$1.457 billion from US$1.450 billion during the third quarter of the fiscal year 2019 on improved price/mix and volume growth which were partially offset by foreign currency impacts.

Specialty ingredients delivered net sales growth across all geographic regions. The company reported growth in its sweeteners and reduced-calorie sweeteners on strong demand as well as Starch-based texturizers led by specialty potato starches.

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Net income attributable to Ingredion was US$99 million in the third quarter, which was up 4% from US$95 million in the previous year’s third quarter.

Late crop plantings and delayed harvest in the United States have had negative impacts as have continued crop inventory imbalances arising from the U.S./China trade dispute.

In North America, operating income of US$145 million was up 5% from US$138 million in the previous year’s third quarter.

Improved price/mix and benefits from a Cost Smart savings program were offset partially by higher net corn costs. Sales rose to US$892 million from US$889 million.

In South America, operating income increased 23% from US$22 million in the previous year’s third quarter to US$27 million .

Favorable pricing actions, volume and the benefits of the Cost Smart program more than offset negative foreign exchange impacts. Sales rose 3% to US$234 million from US$228 million.

In Asia-Pacific, net income slipped 12% to US$22 million from US$25 million in the previous year’s third quarter on increased operating costs in Australia and the impact of trade disputes. Sales dropped 1% to US$196 million from US$197 million.

In Europe, Middle East and Africa, operating income dropped 8% to US$24 million. Strong pricing actions partially offset higher corn costs and unfavorable foreign exchange impacts. Sales dropped 1% to US$135 million.

“Our pricing actions delivered US$50 million of favorability in the quarter, nearly offsetting all of the foreign exchange impacts versus the year-ago period,” said James P. Zallie, president and chief executive officer

“We are formulating systems, which include specialty starches, plant-based proteins and hydrocolloids, for consumer-preferred, clean labeled textural solutions,” he said.

“For example, we’re working closely with customers, both large and small, to innovate and co-create by combining potato starch, pea protein, gums and (curd) extracts to formulate texturized meat alternatives.

“Capitalizing on this collaboration, we are actively filling our customer pipeline for plant-based protein ingredients.”

Over the first nine months of the fiscal year, Ingredion companywide reported a 13% decline in net income attributable to the company to US$304 million while sales slipped 2% to US$4.311 billion from US$4.414 billion.

“Due to the expected impacts of trade disputes weakening the economy of our northern Asian businesses, political uncertainty in Argentina and the postponement of Brexit, we have lowered our expectations for the fourth quarter,” said James D. Gray, executive vice-president and chief financial officer.

The Westchester-based company revised its full-year guidance for adjusted earnings per share to a range of $6.45 to $6.65.

The original guidance for adjusted eps in the fiscal year was a range of $6.80 to $7.50 per share. Then it was changed to a range of $6.80 to $7.20 after the first quarter and a range of $6.60 to $6.90 after the second quarter.

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