Corn Products Profits Boosted by National Starch Acquisition

Second quarter 2011 net sales rose 58 percent from $1.00 billion to $1.58 billion. The increase is primarily attributable to higher volume of $337 million driven by sales from the National Starch acquisition.

Jul 29 2011 --- Corn Products International, Inc., a leading global provider of ingredient solutions to diversified industries, hasreported that second quarter diluted earnings per share (EPS) rose 110 percent to $1.01 compared to $0.48 last year. The second quarter of 2011 included $0.07 per share of acquisition integration charges and $0.02 per share of restructuring charges. The second quarter of 2010 included $0.23 per share of restructuring charges and $0.04 per share of acquisition costs. Excluding these items, adjusted EPS rose 47 percent from $0.75 to $1.10 in the quarter.

First half 2011 EPS rose 183 percent to $2.97 from $1.05 in the year-ago period. First half 2011 EPS included $0.13 per share of acquisition integration charges, $0.02 of restructuring charges, and a $0.75 per share gain as a result of a payment from the Government of Mexico pursuant to a settlement in the Company's favor regarding a North American Free Trade Agreement (NAFTA) dispute. The first half of 2010 included $0.27 per share of restructuring charges and $0.06 per share of acquisition costs. Excluding these items, adjusted EPS rose 72 percent from $1.38 to $2.37 in the first half of 2011.
 
"Corn Products delivered a very good second quarter and first half of 2011," said Ilene Gordon, Chairman, President and Chief Executive Officer. "As expected volumes were relatively stable as customers and consumers continue to deal with economic challenges in various markets. Our pricing remains strong as we manage through rising input costs. We also successfully completed a sizable maintenance project at our largest facility and continue the integration of National Starch. We remain on-plan and are managing our business through a volatile marketplace while maintaining a sharp focus on executing our strategy."

Second quarter 2011 net sales rose 58 percent from $1.00 billion to $1.58 billion. The increase is primarily attributable to higher volume of $337 million driven by sales from the National Starch acquisition. Higher price/mix contributed $205 million, and $40 million of the increase was a result of favorable foreign exchange rates.
 
For the year to date, net sales increased 57 percent, or $1.10 billion, from $1.94 billion to $3.04 billion. Volume represented $688 million of the change, of which approximately $701 million came from the acquired National Starch business. The remainder of the change was $356 million of price/mix and $60 million of favorable foreign exchange.
 
Gross profit increased by 66 percent, or $108 million, in the second quarter from $164 million to $272 million, expanding the gross profit margin from 16.3 percent in the year ago period to 17.2 percent this year. The improvement was largely driven by the addition of the National Starch business partially offset by $13 million related to the sizable maintenance project completed at the Company's largest facility. This quarter also included $3 million of accelerated depreciation related to the Company's North American manufacturing optimization initiative.
 
For the first six months, gross profit rose by 86 percent, or $263 million, from $307 million to $570 million. Gross margin increased from 15.8 percent to 18.7 percent. The improvement is attributable to both acquired and organic business growth.
 
Second quarter operating income was up 76 percent, or $58 million, from $77 million to $135 million. The change was primarily driven by income associated with the National Starch business as well as integration synergies and foreign exchange. These factors were partially offset by an estimated $13 million of cost related to the sizable maintenance project completed at the Company's largest facility.
 
Excluding $11 million of integration and restructuring charges in the second quarter 2011, and excluding $22 million of integration and restructuring charges in the second quarter 2010, adjusted operating income rose 48 percent from $99 million to $145 million in the second quarter 2011.
 
In the first six months, operating income rose 144% from $148 million to $362 million. Income from the National Starch acquisition was a key driver of the change along with organic business growth, integration synergies and foreign exchange.
 
Excluding $58.4 million from the NAFTA award and $18 million of integration and restructuring costs in the first half 2011, and excluding $28 million of integration and restructuring charges in the first half 2010, adjusted operating income for the first half increased 83 percent from $176 million to $321 million.
 
The Company realized $6 million of integration synergies generated by numerous procurement and employee-related initiatives in the second quarter 2011. For the first half of the year, the Company generated $12 million of savings from these items.