Income up 19% in Penford North American food ingredients business

by Eric Schroeder
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CENTENNIAL, COLO. — The Penford Corp. posted operating income of $2,853,000 in its Food Ingredients — North America business for the first quarter ended Nov. 30. In the previous year’s first quarter, net income for Food Ingredients — North America was $2,401,000.

Sales in the quarter were $15,240,000, up narrowly from $15,090,000 in last year’s first quarter. The company said sales of applications in the protein segment, which includes chicken products, processed meat and cheese, increased at double-digit rates.

Volumes and average unit selling prices were comparable to last year, Penford said.

Gross margin as a per cent of sales increased $500,000 to $4.8 million, reflecting changes in product mix, improved plant productivity and lower unit energy costs.

In the company’s Industrial Ingredients business, operating income was $3,182,000, up sharply from $574,000 in the same period a year ago. Sales rose 14% to $43,972,000 from $38,480,000.

Penford said its plan to invest $42 million at its Cedar Rapids, Iowa, facility to manufacture up to 40 million gallons of ethanol a year is "progressing as planned." Production is expected to begin by the end of this year, the company said.

"Fiscal 2007 is off to a strong start," said Thomas Malkoski, president and chief executive officer. "Demand for our higher value applications is growing, and process improvements and investments in operations are showing results. Our industrial business has stepped up its performance, and the ethanol expansion project is advancing as planned. We continue to develop and commercialize specialized food products in Australia and North America that should expand sales opportunities and improve returns."

Overall, Penford posted net income of $2,573,000 for the first quarter, equal to 28c per share, up from $196,000, or 2c per share, in the same period a year ago. Sales for the first quarter of 2007 were $85,500,000, up 10% from $77,903,000.

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