WESTCHESTER, ILL. — Its acquisition of Penford Corp. completed, Ingredion, Inc. is looking for other businesses that might help the company provide texture benefits in food and beverages.
“When I talk about our M.&A. and using our balance sheet, our strong balance sheet, we look to broaden the portfolio, and No. 1, we look in texturizers because we’re the leader,” said Ilene Gordon, chairman and chief executive officer of Ingredion, in an April 30 call to discuss first-quarter earnings.
She said the “sweet spot” for any future transaction would be a $300 million to $500 million type business. Ingredion on March 11 completed the approximately $340 million cash transaction for Penford Corp., a specialty ingredients supplier known for potato starch ingredients and based in Centennial, Colo.
Ms. Gordon added Ingredion’s knowledge of sweeteners is helpful in formulating recipes focused on texture.
“I’ve said before (that) texture is the new taste, and you’ll see offerings by food companies that talk about crunchy and creamy and whether it’s in the dairy area or it’s in the snacking area or baking area,” she said.
Westchester-based Ingredion in the first quarter ended March 31 had net income of $85.7 million, equal to $1.17 per share on the common stock, which compared to $75.2 million, or 97c per share, in the previous year’s first quarter. Net sales of $1,330.1 million were down 2% from $1,357.2 million in the previous year’s first quarter as a result of currency devaluations and the pass through of lower net corn costs, partially offset by volume growth.
Ms. Gordon said in the first quarter organic volumes grew 3% and Penford provided an additional 2% volume growth. In North America, volume grew 8% with 3% due to the Penford acquisition.
In the first quarter in North America, operating income was $102.1 million, which compared with $65.2 million in the previous year’s first quarter, and net sales were $754 million, which compared with $736.9 million.
“Operating income in North America was $102 million for the quarter, up 57% versus last year, as we lapped last year’s adverse weather and our facilities performed admirably through this year’s cold winter,” Ms. Gordon said.
Ingredion’s South America region in the first quarter reported operating income of $24.6 million, down from $29.9 million, and net sales of $258.1 million, down from $293.8 million. The Asia Pacific region had operating income of $25.6 million, down from $25.7 million, and net sales of $186.9 million, up from $185.4 million. The Europe, Middle East and Africa region had operating income of $22.1 million, up from $21.1 million, and net sales of $131.1 million, down from $141.1 million.
Ingredion, in providing guidance for the year, said adjusted earnings per share should be $5.50 to $6, which includes an impact of 8c to 12c per share from the Penford acquisition.“This acquisition continues our transformation into an ingredients company by addressing growing consumer trends, including nutrition, gluten-free, food textures and sustainable biomaterial solutions,” Ms. Gordon said.