WESTCHESTER, ILL. — Customer product price mix management in North America was better than anticipated at Ingredion, Inc. in the first quarter of fiscal 2023, helping prop up income and sales in the region and playing a key role in driving record quarterly profit and earnings per share at the Westchester-based company.
Net income attributable to Ingredion in the first quarter ended March 31 was $191 million, equal to $2.89 per share on the common stock, up 47% from $130 million, or $1.94 per share, in the same period a year ago. Operating income of $291 million was up 39% from $210 million.
Net sales of $2.14 billion were up 13% from $1.89 billion.
In North America, operating income of $207 million was up 33% from $156 million in the previous year. The increase was driven by favorable price mix, partially offset by higher input costs and lower volume, Ingredion said. Net sales increased 16% to $1.36 billion.
In South America, operating income rose 33% to $41 million as favorable price mix more than offset higher input costs, foreign exchange impacts and lower volume. Net sales increased 7% to $269 million. In Asia Pacific, operating income increased 27% to $28 million. Favorable price mix was only partially offset by higher input costs and lower volume. Net sales increased 2% to $277 million. In Europe, Middle East and Africa, operating income surged 84% to $57 million, driven by favorable price mix, partially offset by higher input costs and foreign exchange impacts. Net sales increased 21% to $235 million.
During a May 3 conference call with analysts, James P. Zallie, president and chief executive officer, noted progress within Ingredion’s specialty growth platforms, which he said delivered double-digit net sales growth in the quarter.
“Better price and customer mix favorably impacted net sales growth, which was partially offset by customer inventory rebalancing and softer overall category volumes,” Mr. Zallie said. “During the quarter, PureCircle continued to win business with customers by co-creating natural high-intensity sweetener solutions using our Stevia portfolio to replace artificial sweeteners.”
He also pointed to an increase in the number of sugar reduction projects Ingredion is involved in, driven by customers’ preference for high-intensity natural solutions.
“Our clean and simple ingredient platform benefited from the ramp-up of the capacity expansion completed in 2022, which is now exceeding our commercial growth expectations, enabling us to meet customer demand in both the US and Europe,” he said.
Another positive for Ingredion in the quarter was the company’s KaTech Food Systems business, which Ingredion acquired in 2021. An international food technology company that supplies textural food ingredient solutions to food manufacturers and brands, KaTech turned in 40% year-over-year net sales growth in the first quarter, driven largely by wins in North Africa and Europe, Mr. Zallie said.
“This commercial integration has gone extremely well, and we are winning new contracts in both developed and emerging markets,” he said.
Ingredion in 2023 expects adjusted EPS to be in the range of $8.70 to $9.40, up from its earlier forecast of $7.70 to $8.40. Ingredion forecasts North American operating income to be up 20% to 25%, with price mix continuing to outpace lower volumes and increasing costs.
“Our updated full-year outlook reflects the effective customer and price mix management that our commercial teams have executed and the cost efficiency opportunities our operations and supply chain teams are pursuing,” he said. “We are carefully watching volume demand and are expecting customer inventories to normalize in the second quarter. Thereafter, we expect to see a steady pickup in volumes throughout the second half. We are seeing innovation activity from our customers picking up and are encouraged by the opportunities for co-creation, particularly for affordable formulating, sugar reduction and clean label solutions.
“Lastly, our business continues to demonstrate resilience, and our teams are responding with agility, despite slowing economic growth. We see opportunities to invest in specialties growth and upgrade our core product mix. And we remain focused on executing against our driving growth road map to create long-term value for our shareholders.”