Corn Products Profits Up 21% in Q4

The three primary contributors to changes in net sales in the fourth-quarter were a positive $60 million from stronger foreign currencies; a positive $48 million from improved volumes; and a negative $49 million from lower price/mix, approximately half of which was related to lower co-product selling prices.

3 Feb 2010 --- Corn Products International, Inc., a leading global provider of agriculturally derived ingredients for diversified markets, reported 2009 fourth-quarter net income of $56 million, up 21 percent compared to $46 million reported for the same period last year. On an EPS basis, fourth-quarter 2009 earnings per diluted common share were $0.74 compared to $0.61 earned in the fourth-quarter of 2008. Included in the 2008 fourth-quarter results was a negative 9 cents per share impact from the reimbursement of expenses in connection with the terminated merger with Bunge Limited.

"We are pleased with the fourth-quarter results," said Ilene Gordon, Chairman, President and Chief Executive Officer. "On a total company basis, volumes, margins, and foreign currencies were favorable versus last year and are reflected in the 55 percent improvement in operating income and the 21 percent improvement in EPS. All three regions performed better than last year on an operating income basis."

The 13 cents improvement in earnings per diluted common share was driven by solid performance from operations, which contributed changes of approximately 39 cents. This was offset by non-operational changes of a negative 26 cents, attributable to a higher effective tax rate.

The 2009 fourth-quarter effective tax rate was 38.2%.

Net sales of $959 million in the fourth-quarter of 2009 increased 7 percent versus $900 million in the prior-year period. The three primary contributors to changes in net sales in the fourth-quarter were a positive $60 million from stronger foreign currencies; a positive $48 million from improved volumes; and a negative $49 million from lower price/mix, approximately half of which was related to lower co-product selling prices.

Fourth-quarter 2009 gross profit of $163 million improved 15 percent versus $141 million a year ago. The gross margin of 17.0 percent compared favorably to 15.7 percent last year. The improvement in gross profit is mainly attributable to higher volumes and stronger foreign currencies, not withstanding increases in total company net corn and energy costs per ton versus a year ago.

Operating expenses in the fourth-quarter were $66 million, or 6.9 percent of net sales, versus $67 million, or 7.4 percent of net sales, last year. Other income in the fourth-quarter of 2009 was $2 million compared to an expense of $11 million last year largely related to expenses in connection with the terminated merger with Bunge. Operating income for the fourth-quarter of 2009 was $99 million, compared to $64 million last year.

Net financing costs in the fourth-quarter of 2009 were $6 million versus $5 million last year, as lower net interest expense was offset by an unfavorable foreign currency swing of $7 million.

Diluted weighted average shares outstanding in the fourth-quarter of 2009 were up slightly to 75.8 million from 75.6 million in the same quarter last year.

Regional results for the quarter ended December 31, 2009 were as follows:

North America: Net sales of $554 million decreased 2 percent from $563 million in 2008. The decline was due to negative price/mix of $25 million, partially offset by higher volumes of $4 million, and stronger Canadian dollar of $12 million. The decline in price/mix was largely due to co-products, which declined by $22 million compared to the same quarter last year. Operating income of $62 million increased 31 percent from $48 million last year, primarily due to lower manufacturing costs. Gross corn costs per ton decreased 4 percent versus last year, while net corn costs per ton increased 8 percent.

South America: Net sales of $298 million increased 21 percent compared with $246 million a year ago, primarily due to the impact of favorable foreign currency translation of $42 million and improved volumes of $29 million, partially offset by unfavorable price/mix of $19 million. Gross corn costs per ton increased 11 percent versus last year, while net corn costs per ton increased 17 percent. Operating income increased 22 percent to $46 million compared with $38 million in the prior year.

Asia/Africa: Net sales of $106 million increased 16 percent versus $91 million last year, primarily due to the higher volumes of $15 million and favorable foreign currency translation of $5 million, partially offset by lower price/mix of $5 million. Gross corn costs per ton declined 2 percent versus last year while net corn cost per ton decreased 11 percent. Operating income of $6 million was up from $3 million last year.

"As the fourth-quarter confirms, 2009 was a year of two halves," said Ilene Gordon. "The first half was marked by soft volumes, higher net corn costs, unfavorable foreign currencies, and the write-off of the goodwill in our Korean business. The second half showed marked improvement as we worked through the higher corn costs, foreign currencies turned in our favor, and volumes began to recover.

"Throughout the year we remained focused on execution, managing costs and preserving financial flexibility. Our team's efforts are clearly visible in the quarter by quarter earnings improvement and in our balance sheet. During 2009 we generated $586 million in cash flow from operations and applied $332 million to debt repayment. At the same time we maintained our dividend and stayed committed to our future growth by investing $141 million in capital back into the business."

The Company reported 2009 full-year earnings per diluted common share of $0.54, down from $3.52 per diluted common share reported for 2008. The 2009 results include the after tax impact of impairment and restructuring charges of $1.47 per diluted common share. Full-year 2008 results included a 14 cent negative impact from costs related to the terminated merger with Bunge.

Annual net sales of $3.67 billion in 2009 declined 7 percent from $3.94 billion in 2008. The decline in sales resulted from unfavorable foreign currency translation of $183 million; lower volumes of $79 million; and lower price/mix of $9 million. The negative impact on price/mix of lower co-product prices was $134 million.

Operating expenses as a percentage of net sales in 2009 were 6.7 percent versus 7.0 percent in 2008. Operating income of $153 million in 2009 was down 65 percent compared with $434 million a year earlier. 2009 operating income included the negative impact of $125 million in impairment and restructuring charges. The operating margin decreased to 4.2 percent in 2009 versus 11 percent in 2008.

Net financing costs in 2009 increased to $38 million from $29 million in 2008. The increase was attributable to foreign exchange losses in 2009, versus foreign exchange gains in 2008, as net interest expense declined 16 percent. The effective 2009 tax rate of 59.5 percent, compared to 32.0 percent in 2008, includes the impact of the impairment and restructuring charges recorded in the second quarter of 2009.