Corn Products Profits Down 40% in Q3

The three primary contributors to changes in net sales in the third quarter were a negative $50 million from foreign currency translations; a negative $38 million from price/mix attributable to co-products; and a negative $26 million from lower volumes.

28 Oct 2009 --- Corn Products International, Inc., a leading global provider of agriculturally derived ingredients for diversified markets, has reported net income of $53 million, or $0.70 per diluted common share, for the third quarter of 2009, versus the record-setting net income and earnings per diluted common share of $88 million and $1.15, respectively, for the same period last year.

Third-quarter 2009 results were negatively impacted by higher net corn costs, unfavorable foreign currency translations and softer volumes. The estimated change in earnings per diluted share from lower co-product prices (corn oil, feed, and meal) was a negative $0.21; lower price/margins was negative $0.11; lower other income was a negative $0.09; and weaker foreign currencies and lower volumes were a negative $0.06 and $0.04 respectively. A lower effective tax rate added $0.04, while a change in non-controlling interest and fewer shares outstanding each added $0.01.

Net sales of $971 million in the third quarter of 2009 decreased 10 percent versus $1.08 billion in the prior-year period. The three primary contributors to changes in net sales in the third quarter were a negative $50 million from foreign currency translations; a negative $38 million from price/mix attributable to co-products; and a negative $26 million from lower volumes.

Gross profit of $153 million in the third quarter of 2009 declined 25 percent versus $204 million a year ago. The gross margin of 15.8 percent compared with 18.8 percent last year. The decline in gross profit is mainly attributable to the higher net corn costs and lower volumes in the North American business.

Total Company gross corn costs per ton decreased 5 percent; however, net corn costs per ton increased 12 percent, primarily due to lower corn oil prices. Energy costs decreased 5 percent versus a year ago.

Operating expenses in the third quarter were $66 million or 6.8 percent of net sales, versus $67 million, or 6.2 percent of net sales, last year. Other income in the third quarter of 2009 was less than $1 million compared to $11 million last year. Last year`s other income included a $4 million insurance recovery and a $3 million gain from a land sale.

Operating income for the third quarter of 2009 was $88 million compared to $148 million last year.

Net financing costs in the third quarter of 2009 were $9 million versus $10 million last year, as lower net interest expense more than offset an unfavorable foreign currency swing of $3 million. The third quarter effective tax rate of 31.2 percent was down from 34.9 percent last year, and included an approximately $2 million benefit from discrete items this quarter. Excluding the impact of the discrete items, the Company estimates that the effective annual tax rate would have been approximately 34 percent.

Diluted weighted average shares outstanding in the third quarter of 2009 declined 1 percent to 75.7 million from 76.3 million in the same quarter last year.

"This quarter`s diluted earnings per common share of $0.70 was our fourth-best quarter ever, trailing only the first three quarters of last year. We are pleased with the overall results and the improving trend line in certain parts of the world. South America volumes rebounded nicely, and we saw not only 2009 quarter-over-quarter sequential growth, but growth over third quarter 2008 volumes. In North America and Asia/Africa, we saw 2009 sequential volume improvement in the third quarter," said Ilene Gordon, Chairman, President and Chief Executive Officer.

"Given how the business performed in the third quarter, we are narrowing our full-year earnings guidance to a range between $1.80 - $2.00 per diluted common share, excluding the after tax impact of impairment and restructuring charges of $1.47 per diluted common share taken in the second quarter of 2009, versus the previous range of $1.70 to $2.10," said Ilene Gordon. "The revised range reflects expectations of continued volume weakness in the North American business, weaker demand and pricing pressure in Asia, as well as anticipated favorable trends in currencies and better prices for co-products. We remain confident in our estimate that cash flow from operations for 2009 will be in the range of $425 million to $525 million, and we expect 2009 capital expenditures to be approximately $150 million."

"While the global economy is adversely affecting our earnings this year, we are successfully managing through the uncertainty and volatility. Our business model held up well with strong cash flow generation. We were able to maintain a strong balance sheet and pay down $180 million of debt. We held the dividend rate constant and were still able to provide funding for the capital investment program," Gordon said.