Ingredion Profit Down Slightly in Q3, Reconfirms Outlook
30 Oct 2015 --- Ingredion Incorporated has reported that net sales were down in Q3 as a result of changes in foreign currency-exchange rates and the pass through of lower corn costs, partially offset by volume growth, both organic and acquisition-related, and increased prices in South America which partially compensated for currency headwinds.
Third quarter reported and adjusted operating income were $175 million and $192 million, respectively. These were a two percent decrease and eight percent increase, respectively, compared to $178 million of reported operating income in the third quarter of 2014. The increase in adjusted operating income was primarily due to: organic volume growth in core and specialty ingredients; acquisition-related volume growth; margin expansion in North America; and improved price/mix in South America. These positives were partially offset by the negative effect of foreign exchange.
Year-to-date 2015 reported and adjusted operating income were $487 million and $529 million, respectively. These were five percent and 14 percent increases, respectively, compared to $463 million of year-to-date 2014 reported operating income. The increases in operating income were primarily due to: organic volume growth in core and specialty ingredients; acquisition-related volume growth; margin expansion in North America; and improved price/mix in South America. These positives were partially offset by the negative effect of foreign exchange.
Third quarter reported operating income was lower than adjusted operating income by $17 million. Of this, $12 million is related to Brazil restructuring; $2 million is related to severance-related charges for the sale of our plant in Port Colborne, Canada expected to close in the fourth quarter of 2015; and $3 million is for acquisition-related costs for Penford and Kerr.
"Our solid third quarter results reflect the overall positive trajectory of our business," said Ilene Gordon, chairman, president and chief executive officer. "Higher core and specialty volumes, improved mix, good operating efficiency, and the impact of acquisitions, more than offset foreign-exchange headwinds. Year-over-year operating income improved in North America, South America, and Asia Pacific.”
"Our growth strategy continues to drive robust results and we remain confident in our 2015 outlook. Volume growth, disciplined cost management, and improved mix are expected to continue in the fourth quarter. Our Kerr acquisition, which broadens our wholesome and clean-label ingredient portfolio, was finalized in August and the Penford integration remains on track for at least $20 million in annualized cost synergies. We continue to take actions to optimize our cost structure for the future. Our expectation for adjusted EPS for the year is raised to $5.75-$5.90, including accretion resulting from both transactions, but excluding costs related to acquisitions and restructuring." Gordon added.
