Corn Products earnings climb 68% in quarter

by Eric Schroeder
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WESTCHESTER, ILL. — Higher corn prices and heavier demand helped lift second-quarter earnings at Corn Products International, Inc. Net income in the second quarter ended June 30 totaled $50.6 million, equal to 68c per share on the common stock, up from $30.1 million, or 41c, in the same period last year.

Net sales for the quarter rose 33% to $857 million. Corn Products attributed the sales improvement to better price/product mix, along with favorable volumes and foreign currency translations. The acquisitions of SPI Polyols, Getec and DEMSA contributed approximately $29 million to net sales in the quarter, the company said.

For the first six months of fiscal 2007, earnings totaled $100.6 million, or $1.35 per share, up 88% from $53.5 million, or 72c per share, in the first half of fiscal 2006. Net sales were $1,618.8 million, up 29% from $1,259.7 million.

In North America, Corn Products posted operating income of $68.4 million, up 85% from $36.9 million in the second quarter of 2006. The increase was due to continued strong performance in the United States, Canada and Mexico. Net sales in the segment rose 34% to $533.7 million.

Operating income in South America climbed 56% to $25.9 million, driven in large part to a significant improvement in Brazil. Sales in South America were $218.5 million in the second quarter, up 40% from $155.6 million.

Operating income in the Asia/Africa division fell 22% to $11.7 million from $15 million, while sales rose 15% to $104.8 million. Moderate growth in Pakistan was more than offset by lower results in South Korea and Thailand.

Given the strength of its second-quarter results, Sam Scott, chairman, president and chief executive officer, said the company has raised its earnings forecast for the year to $2.35 to $2.55, which would be up from a record of $1.63 per share in fiscal 2006.

"Our North American region should remain the major profit driver for the rest of 2007, along with solid improvement from South America," Mr. Scott said. "We anticipate flat profitability in Asia/Africa due to a weaker performance in South Korea, which is impacting operating income growth in the region.

"We expect a healthy second half of 2007. Our full-year e.p.s. guidance calls for the last half of 2007 to be in the range of $1.03 to $1.23, versus 92c a year ago, which would be a double-digit increase of 12% to 34%."

Mr. Scott said Corn Products also has stepped up its 2007 capital spending plan, raising the plan to $200 million from $145 million. He said the increase reflects new and attractive growth projects, including the recent polyols investments in the United States, Mexico and Brazil, as well as a new plant investment in Pakistan.

"Our record capital expenditures program this year supports several of our Pathway Strategy steps to drive organic growth in our base business and broaden our value-added product portfolio," Mr. Scott said.

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