Ingredion results recover in Q3 as effect of Covid-19 taper off

US — The influence of COVID-19’s effect on away-from-home activities lessened somewhat in the third quarter enabling Ingredion to perform better than it did in the second quarter.

Net sales in Q3 amounted to US$1.55 billion, a 13% increase from the US$1.349 billion recorded in Q2.

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Despite of better performance in Q3, Ingredion sales were still low when compared to pre-Covid-19 times.

Net income attributable to Ingredion in the third quarter was $92 million, a 7% decline from $99 million recorded in the previous year’s third quarter.

Net sales for the company, on the other hand, amounted to $1.5 billion, a 5% decline when compared to the $1.57 billion achieved in the same period last year.

Ingredion says, Foreign exchange impacts in South America and sales volume declines in North America drove the decrease.

Regional Performance

In North America, operating income slipped 9% to $132 million from $145 million in the previous year’s third quarter.

COVID-19 continued to impact away-from-home consumption negatively, and Ingredion reported unfavorable mix in the United States and Canada. Sales declined 6% to $928 million from $984 million.

In South America third quarter operating income increased 7% to $29 million from $27 million while sales fell 9% to $224 million from $245 million.

A strong price mix was offset partially by unfavorable foreign currency impacts. Sales of brewing ingredients recovered and sweetener sales improved.

For Asia Pacific, third quarter operating income dropped 18% to $18 million from $22 million while sales increased 1% to $207 million from $205 million.

supplier of stevia-based sweeteners PureCircle which was acquired in July accounted for an operating loss of $5 million.

In Europe, Middle East and Africa (EMEA) third quarter operating income increased 4% to US$25 million from US$24 million while sales rose 2% to US$143 million from US$140 million.

The increase in operating income largely was attributed to favorable price mix in Pakistan and lower operating expenses in Europe.

Comnmenting on the results, president and chief executive officer at Ingredion, Mr. James P. Zallie said, “Quarter-three results were sequentially better than the second quarter’s 13% year-over-year decline in net sales.”

According to Zallie,“Quarter-three results demonstrated improved volume demand and better fixed cost absorption.”

4th Quarter Prospects

Despite of the growth prospects seen in third quarter; company executives spoke cautiously about fourth-quarter prospects.

Ingredion projects a slow resumption of consumer activity in both the US and Mexico and are watchful of potential COVID resurgence, which could lead to greater restrictions and new stay-at-home orders.

In the EMEA region, the company anticipates operating income to be down in mid-single digits to high single digits, driven by higher expected corn costs in Pakistan.

According to Ingredion, the effects of a hard exit of Britain from the EU trading block and very recent country stay-at-home restrictions are additional uncertainties potentially impacting volume demand.

“Ingredion in the fourth quarter expects continued adverse impacts from COVID-19 on net sales across its operating segments,” said James D. Gray, executive vice president and chief financial officer.

Gray further noted that recovery in sales generally will be correlated with easing of restrictions and increased consumer activity out-of-home.

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