Ingredion reports Q1 net earnings of US$72.6M, down 34.5% from year-ago period as net sales fall 13.9% to US$1.36B

WESTCHESTER, Illinois , April 30, 2014 (press release) – First quarter 2014 reported EPS fell 32 percent to $0.96 from $1.41 in the first quarter 2013

Company maintains full year earnings per share guidance of $5.35 to $5.75 in spite of higher-than-expected weather-related costs and increased anticipated negative impact from foreign exchange rates

Company continues to expect operating income to increase in all four regions for the full year

Ingredion Incorporated (INGR), a leading global provider of ingredient solutions to diversified industries, today reported results for the first quarter 2014.

"As we expected and communicated in our outlook, the first quarter was down sharply compared to the year ago period," said Ilene Gordon, chairman, president and chief executive officer. "As expected, Argentina was down significantly as we begin to lap the economic and political issues that have led to a severe cost squeeze. In North America, the impact of extreme winter weather conditions on operating, energy and transportation costs persisted throughout the quarter and resulted in worse-than-anticipated operating income. Also as forecast, the layout of our corn costs for our fixed price contracts resulted in year-over-year unfavorability.

"Also in-line with our expectations for the quarter, volumes were positive in South America, Asia Pacific and EMEA. At the same time, operating income was up in Asia Pacific and EMEA while South America showed continued year-over-year sequential improvement.

"Our operating plan anticipated this slow start to the year and we expect year-over-year results to improve in each quarter as the year unfolds. As such, we are maintaining our full year EPS and operating income guidance," Gordon added.

Financial Highlights

At March 31, 2014, total debt and cash and cash equivalents were $1.78 billion and $560 million, respectively, versus $1.81 billion and $574 million, respectively, at December 31, 2013.

During the first quarter of 2014, net financing costs were $17 million, flat with the year-ago period.

The first quarter effective tax rate was 28.8 percent compared to 29.2 percent in the year-ago period.

In the first quarter 2014, cash flow provided by operations was $121 million, compared to $30 million of cash used in operations in the first quarter 2013.

Capital expenditures, net of disposals, were $59 million in the first quarter 2014 and $66 million in the year-ago period.

Business Review

Total Ingredion

First quarter 2014

Sales were down 14 percent as a result of currency devaluations and negative price/mix which was a result of lower raw material costs partially offset by a slight increase in volume.
Operating income was $122 million, a 30 percent decrease compared to $175 million in the first quarter of 2013. The decline was primarily due to soft results in North America caused by costs associated with extreme weather and the layout of fixed price contract corn hedges, and continued weakness in Argentina. Strength in Asia Pacific and EMEA helped partially offset the decline.

North America

First quarter 2014

Sales declined 19 percent as a result of unfavorable price/mix due to lower raw material costs, negative volume and currency headwinds. The significant decline in price is a result of the pass-through of lower corn costs.

Operating income of $65 million was down 39 percent from a record first quarter in 2013 of $108 million primarily due to costs associated with extreme weather and the year-over-year variance in corn hedges. The weather-related costs represented about half of the decline.

South America

First quarter 2014

Sales were down largely due to currency devaluations in Brazil and Argentina partially offset by increased volume in Brazil and Colombia as well as favorable price/mix in the region.
Operating income in the quarter was $30 million, down 31 percent, or $13 million primarily as a result of higher input costs and currency devaluations that could not be immediately passed through during the quarter. Over 90 percent of the decline was attributable to Argentina.

Asia Pacific

First quarter 2014

Sales decreased 5 percent as a result of foreign exchange headwinds and unfavorable price/mix partially offset by positive volume.

Operating income rose 12 percent from $23 million to $26 million. The results were particularly good in China, South Korea and Thailand.

Europe, Middle East, Africa (EMEA)

First quarter 2014

Sales rose by 9 percent due to price/mix improvement and volume growth partially offset by slight currency devaluations.

Operating income was $21 million, an increase of 9 percent, largely due to favorable price/mix and volume growth.

2014 Guidance

2014 EPS is expected to be in a range of $5.35 to $5.75 compared to $5.05 in 2013. The guidance anticipates ongoing cost pressures in Argentina; a challenging environment as sugar prices remain low; an increase in expected negative impact from foreign exchange rates from $0.20 to $0.25 to $0.30 to $0.35; and, an effective tax rate of 27 - 28 percent. All four regions are expected to deliver increased operating income. However, as a result of lower input costs, sales are expected to drop significantly for the total Company.

Cash generated by operations is expected to be approximately $700 - 750 million in 2014.

Capital expenditures in 2014 are anticipated to be approximately $300 million. These investments will support growth and cost reduction actions across the organization.

Conference Call and Webcast

Ingredion will conduct a conference call today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to be hosted by Ilene Gordon, chairman, president and chief executive officer, and Jack Fortnum, chief financial officer.

The call will be broadcast in a real-time webcast. The broadcast will consist of the call and a visual presentation accessible through the Ingredion web site at The presentation will be available to download approximately 60 minutes prior to the start of the call. A replay of the webcast will be available at


Ingredion Incorporated (INGR) is a leading global ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. With customers in more than 40 countries, Ingredion serves approximately 60 diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. For more information, visit

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