Ingredion forecasts robust demand for traditional packaged food amid pandemic
06 May 2020 --- Ingredients supplier Ingredion has reported its results for the first quarter 2020, highlighting undisrupted demand for its products amid COVID-19. The company notes an US$18 million rise in capital expenditures at the start of this fiscal year following its investments, which include the pending acquisition of stevia producer PureCircle. Moving ahead, the company expects robust demand for traditional packaged food products in light of the pandemic.
“We are pleased with the operational and financial results for the first quarter. Amid macroeconomic disruptions, we experienced solid demand for our products and continued to grow our specialties portfolio,” says Jim Zallie, President and CEOn. “We further streamlined our organization to maximize operational efficiencies as part of our Cost Smart savings program, which is on track to achieve our 2020 savings target.”
Capital expenditures in Q1 were US$98 million, up US$18 million from the year-ago period.First quarter capital expenditures were US$98 million, up US$18 million from the year-ago period due to timing of cash payments made to support the company’s investment in plant-based proteins and other growth projects.
“Following the close of the quarter, we advanced our Driving Growth Roadmap, announcing the pending acquisition of PureCircle, a global leader in the high-intensity natural stevia sweetener space that expands our capabilities in sugar reduction,” highlights Zallie.
On April 9, Ingredion announced an agreement to acquire the Bermuda company traded on the London Stock Exchange. The transaction is expected to close during the third quarter of 2020 subject to regulatory, shareholder approvals and other closing conditions.
“In the second quarter, we expect strong demand for ingredients found in traditional packaged food products predominantly sold in retail grocery. However, the pandemic has significantly impacted foodservice traffic and we expect reduced volumes for ingredients that are formulated into foodservice meals and beverages consumed away-from-home,” he details.
Other financial highlights
On March 31, Ingredion’s total debt and cash and short-term investments at the company were recorded at US$1.9 billion and US$280 million, respectively, versus the US$1.8 billion and US$268 million, respectively, on December 31 last year. The increase in total debt was primarily driven by timing of borrowings, the company notes.
Cash from operations at March 31 was US$65 million, up US$47 million from the year-ago period, driven primarily by improved change in working capital. Meanwhile, net financing costs were US$18 million or US$4 million lower in the first quarter than the year-ago period, driven by lower interest expense.
By Benjamin Ferrer
