Corn Products International Reports 2010 First-Quarter Results

We experienced double-digit volume increases, improved gross profit margins and favorable currencies compared with the first quarter of last year.

28 Apr 2010 --- Corn Products International, Inc., a leading global provider of agriculturally derived ingredients for diversified markets, reported 2010 first-quarter net income of $43 million, compared to $17 million reported for the same period last year. First-quarter 2010 earnings per diluted common share ("EPS") were $0.57, up 159 percent compared to $0.22 in the first quarter of 2009. Diluted weighted average shares outstanding in the first quarter of 2010 were 76.4 million, up from 75.4 million in the same quarter last year.

"We are very pleased with the business recovery," said Ilene Gordon, Chairman, President and Chief Executive Officer. "We experienced double-digit volume increases, improved gross profit margins and favorable currencies compared with the first quarter of last year. The improvements are reflected in the 84 percent increase in operating income. All three regions performed better than last year. We are seeing a strong economic recovery in many of our international markets. In North America, we saw volume improvement across virtually all product categories, led by strong demand from the beverage industry in Mexico. In South America, volume growth was led by our customers in the brewing, confectionary, processed foods, and packaging industries. Volume improvement in Asia/Africa was led by customer demand for sweeteners in South Korea and the start of the economic recovery in Southeast Asia."

Net sales of $937 million in the first quarter of 2010 increased 13 percent versus $831 million in the prior-year period. The primary contributors to growth in net sales were a positive $120 million from higher volumes and a positive $66 million from stronger foreign currencies, partially offset by a negative $80 million from lower price/mix. The price/mix decline was largely attributable to North America and reflected the normal correlation between lower corn costs and the corresponding decline in selling prices.

First-quarter 2010 gross profit of $143 million improved 54 percent versus $93 million a year ago. The gross margin of 15.2 percent compared favorably to 11.2 percent last year. The improvement in gross profit was attributable to cost improvement due to higher utilization rates, cost reduction programs, and stronger foreign currencies.

Operating expenses in the first quarter were $70 million, or 7.4 percent of net sales, versus $55 million, or 6.6 percent of net sales, last year. The increase in operating expenses reflects a return to more historical run rates, the impact of stronger currencies, and higher business and compensation costs.

Operating income for the first quarter of 2010 was $72 million, up 84 percent versus $39 million last year, led by a significant improvement in the North American business.

Net financing costs in the first quarter of 2010 were $5 million versus $11 million last year, reflecting lower average debt outstanding of $542 million versus $852 million in the first quarter of 2009.

The 2010 annual effective tax rate was estimated at 33.0 percent, compared to 33.8 percent in the first quarter of 2009.

Regional Business Segment Performance

Regional results for the quarter ended March 31, 2010 were as follows:

North America

Net sales of $541 million increased 2 percent from $531 million in 2009. The increase was due to higher volumes of $64 million and a $16 million positive impact from a stronger Canadian dollar, partially offset by lower price/mix of $70 million. The decline in price/mix reflected the normal correlation between finished product pricing and a 21 percent decline in corn costs versus last year. Operating income of $38 million increased 89 percent from $20 million last year, primarily due to volume growth, improved plant utilization rates, and cost reduction programs. The operating income margin increased to 7.1 percent from 3.8 percent last year.

South America

Net sales of $278 million increased 30 percent compared with $214 million a year ago, primarily due to the impact of favorable foreign currency translation of $41 million and improved volumes of $35 million, partially offset by unfavorable price/mix of $12 million. Gross corn cost per ton on a dollar basis increased 6 percent versus last year. Operating income increased 30 percent to $36 million, compared with $28 million in the prior year. The operating income margin was 12.9 percent, in line with the same period last year.

Asia/Africa

Net sales of $119 million increased 39 percent versus $85 million last year, primarily due to the higher volumes of $22 million, favorable foreign currency translation of $9 million, and improved price/mix of $3 million. Gross corn cost per ton declined 10 percent versus last year. Operating income of $13 million was up from $2 million last year, reflecting the improved business performance in South Korea. The operating income margin was 11.0 percent, up from 2.1 percent in the first quarter of 2009.

Balance Sheet and Cash Flow

At March 31, 2010, total debt and cash and cash equivalents were $658 million and $321 million respectively, versus $544 million and $175 million respectively at year-end 2009.

Cash provided from operations in the first quarter of 2010 was $57 million compared with $78 million provided in the first quarter of 2009. Net income was $45 million versus $18 million last year. Depreciation and amortization was $35 million compared to $30 million last year, reflecting the impact of capital investments and stronger foreign currencies. Working capital increased $27 million versus a reduction of $17 million last year. The change in 2010 working capital was driven by an increase in the margin accounts of $45 million related to corn futures contracts associated with 2010 firm-price business, versus a reduction in the 2009 margin account of $82 million related to corn futures contracts associated with 2009 firm-price business. Capital expenditures, net of proceeds on disposals, were $21 million in the first quarter of 2010.