USA – Ingredion has reported US$140 million in profit, up 13% on strong operations in South America offset by higher freight and production costs in North America which weighed heavily on earnings in the first quarter.
In the period ended March 31, net sales increased 1% from US$1.453 billion to US$1.469 billion.
As a result of higher costs in the quarter in North America, operating income declined 9% while sales fell 1% to US$874 million and the company said it anticipates reduced freight costs for the rest of the year.
In the region, TIC Gums and Kerr grew with higher net sales though this was weighed down by performance in core ingredients as the region was faced by increase in freight and production costs due to inconsistent demand in Northeast and Canada as well as commodity pricing pressures.
The Asia Pacific division recorded lower operating income but 8% higher in sales, Thailand being the most affected as tapioca costs rose higher than before.
Ingredion said they were able to contain this through extensive production and sourcing network to achieve a continued supply.
EMEA and S. America performed strongly with the latter recording higher operating income which rose 73% from US$15 million to US$26 million despite a decline in sales.
According to James P. Zallie, president and chief executive officer, income reached its highest first-quarter level since 2014, driven by network optimization and restructurings in Brazil and Argentina that have positioned the company to be more cost competitive.
“We expect the restructurings and organizational actions taken in 2017 will continue to drive operating performance and enable specialties growth,” he said.
During the report, James D. Gray, chief financial officer announced adjusted earnings per share of $7.90 to $8.20, lower than from its initial guidance for 2018 highlighting lower operating income outlook for North America.
In the year’s outlook, Ingredion expects higher net sales and volumes than 2017 and continued growth in specialty sales while its forecast for cash from operations in 2018 was between US$830-880 million.