Corn Products returns to profit in quarter

by Jeff Gelski
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WESTCHESTER, ILL. – Corn Products International, Inc. said it achieved net income of $37 million, or 48c per diluted share, for the second quarter ended June 30 despite an after-tax charge of $3 million, or 4c per share, related to the pending acquisition of National Starch Food Innovation. In last year’s second quarter Corn Products lost $85 million, which included after-tax impairment and restructuring charges of $110 million.

Second-quarter net sales increased 10% to $1 billion from $912 million in the last year’s second quarter. Higher volumes affected sales positively by $143 million while stronger foreign currencies affected sales positively $44 million. Lower price/mix had a negative impact of $96 million.

Second-quarter operating expenses were $73 million, including $4 million related to the pending National Starch acquisition. The Westchester-based company on June 21 said it had entered into a definitive agreement to acquire National Starch Food Innovation, Bridgewater, N.J., provider of specialty starches, from Akzo Nobel, based in The Netherlands.

“I am pleased to report that we are making good progress with respect to the National Starch acquisition,” Ilene Gordon, chairman, president and chief executive officer of Corn Products International, said when second-quarter results were given. “Our integration work is under way, and we are progressing with our regulatory filings. We expect the transition to close near the end of September or early October of 2010.”

In North America in the second quarter, Corn Products had net sales of $583 million, which was flat when compared to last year’s second-quarter sales. A lower price/mix of $97 million offset higher volumes of $83 million and a $12 million positive impact from a stronger Canadian dollar. The quarter saw a 23% decline in corn costs versus last year’s second quarter. Second-quarter operating income increased 78% to $60 million from $33 million, primarily due to volume growth, improved plant utilization rates and cost-reduction programs.

In South America in the second quarter, net sales increased 26% to $287 million from $228 million and operating income increased 48% to $39 million from $26 million. In Asia/Africa in the second quarter, net sales increased 35% to $134 million from $99 million and operating income rose to $13 million from $6 million.

“We saw strong volume recovery across all our regions,” Ms. Gordon said. “In North America, we continued to see strong demand from the beverage industry in Mexico. In South America, volume growth was led by our customers in the brewing, confectionery, processed foods and packaging industries. Volume improvement in Asia/Africa was led by customer demand for sweeteners and starches in South Korea and the confectionery and textile industries in Pakistan.”

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