WESTCHESTER, ILL. – Ingredient supplier Ingredion, Inc. entered and exited fiscal year 2020 with momentum. In between, during the second and third quarters, the company’s financial performance was buffeted by market disruptions around the world due to COVID-19 restrictions.
“Our business adjusted quickly to the abrupt and historic slowdown of economic activity in quarter two to ensure we were well positioned to participate in a steady second half recovery and enable us to exit the year with positive momentum,” said James P. Zallie, president and chief executive officer, during a Feb. 3 conference call with securities analysts.
Net income for the year ended Dec. 31, 2020, fell 16% to $349 million, equal to $5.18 per share on the common stock.
Fiscal 2020 sales fell 4% to $5.99 billion.
The company attributed the full-year sales decline to foreign exchange weakness and sales volume declines, most notably in the second quarter.
Fourth-quarter net income rose 6% to $115 million, equal to $1.71 per share, and sales rose 3% to $1.59 billion.
Mr. Zallie said Ingredion made progress against its strategic pillars during the year.
“Specialty ingredients proved particularly resilient, growing globally and in each region, with overall specialty sales now accounting for 32% of Ingredion’s total sales, up from 30% in 2019,” he said. “The PureCircle and Verdient acquisitions set us up well to capitalize on the growth in sugar reduction and plant-based foods, and we continue to diversify our specialties portfolio beyond corn, expanding capacity and capabilities in tapioca, rice and potato-based specialty starches.”
Ingredion acquired full ownership of Verdient Foods in November 2020. The company is a manufacturer of plant-based protein based in Vanscoy, Sask.
“The Verdient acquisition expands our plant-based proteins capabilities, adding a broad portfolio of in demand, sustainable, pulse-based flowers and protein concentrates,” Mr. Zallie said. “At the same time, our South Sioux City facility has been recommended for food-grade certification, and we are processing pea protein isolate in preparation for commercialization this year. The expected future capacity from these investments has led to the development of a growing customer project pipeline, which we expect will convert to specialty sales as we move through 2021.”
Ingredion acquired stevia manufacturer and supplier PureCircle in April.
“We’ve moved swiftly to integrate this business, actioning over $14 million of cost synergies before the end of last year,” Mr. Zallie said. “These moves, along with the benefits inherent and leveraging Ingredion’s global go-to-market network, provide exciting opportunities to drive revenue synergies, commencing in the first half of this year as we offer more complete sugar reduction systems to a broader base of customers.”
The company did not issue specific guidance for fiscal 2021, but James D. Gray, chief financial officer, said management expects net sales and operating income to be up modestly during the year, driven by specialty ingredients growth, other volume recovery and cost savings.
“For the first quarter, we anticipate total company net sales to be slightly up, and operating income to be modestly up,” he said. “We are watchful of COVID-19 infection rates as well as the pace and effectiveness of vaccination rollouts, as we see net sales volume generally correlated with increased consumer activity and availability of food and beverages consumed away from home.”