Ingredion's income, sales fall in fiscal year

by Jeff Gelski
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WESTCHESTER, ILL. — Net income and net sales both fell 10% for Ingredion, Inc. in the fiscal year ended Dec. 31, 2014. Net sales of $5,668.4 million compared with $6,328.3 million in the previous fiscal year. The pass-through of lower raw material costs and currency devaluations were offset partially by volume growth. Net income of $354.9 million, or $4.74 per share, compared with $395.7 million, or $5.05 per share, in the previous fiscal year. Westchester-based Ingredion, pending regulatory approval, expects to close its acquisition of Penford Corp. in the first quarter of the current fiscal year, said Ilene Gordon, chairman, president and chief executive officer, when fiscal-year results were given Jan. 30. Excluding the impact of the pending Penford acquisition, valued at about $340 million, Ingredion expects earnings per share in the 2015 fiscal year to be in a range of $5.40 to $5.90.

“Faced with a slowing world economy and volatile currencies, we concluded 2014 with significant progress on our strategic blueprint,” Ms. Gordon said. “Notably, specialty sales grew to 24% of full-year net sales and overall volumes grew in each of North America, Asia Pacific and EMEA (Europe, Middle East and Africa). Asia Pacific and EMEA achieved record operating income for the full year. These positives were offset by soft demand and foreign exchange headwinds in South America, and weaker-than-expected performance in North America.”

The company’s North America region in the fiscal year had net sales of $3,093.6 million, down 15% from $3,646.9 million in the previous fiscal year. Operating income in North America fell 6% to $375.1 million from $400.8 million. The impact of adverse weather in the first quarter and margin compression with returns on co-products that were lower than expected late in the year more than offset positive volumes in the United States and Canada.

In South America, fiscal-year sales fell 10% to $1,203.3 million from $1,333.8 million and fiscal-year operating income fell 7% to $107.7 million from $116.4 million. In Asia Pacific, fiscal-year sales slipped 1% to $793.7 million from $805.4 million and fiscal-year operating income rose 7% to $103.5 million from $97 million. In Europe, Middle East and Africa, fiscal-year sales rose 7% to $577.8 million from $542.2 million and fiscal-year operating income rose 29% to $95.2 million from $73.8 million.

In the fourth quarter companywide, Ingredion recorded net sales of $1,368.3 million, down 9% from $1,499.2 million in the previous year’s fourth quarter. Fourth-quarter net income of $63.1 million, or 83c per share, was down 40% from $105.7 million, or $1.35 per share, in the previous year’s fourth quarter.

“As we look ahead to 2015, North America is expected to drive bottom-line growth as it returns to normal from adverse weather in the first quarter of 2014 and margins expand,” Ms. Gordon said. “South America, EMEA and Asia Pacific are anticipated to improve modestly given expected continuing economic headwinds, slowing economies and weaker foreign exchange rates resulting from a stronger U.S. dollar across the globe.”
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