Ingredion Targets Annual Sales of $8 Billion by 2019
19 Nov 2014 --- By focusing on higher-value specialty ingredients, Ingredion's objective is to achieve $8 billion in sales by 2019 with specialty products approaching 27-30 percent of those sales, up from an estimated 23 percent in 2014. Long-term growth objectives are higher in the food sector and outside of North America.
"Over the past five years we have significantly outpaced the S&P 500 in share price appreciation and total shareholder return. We continue on that path with improving margins from growth in specialties and strong cash flow," said Ilene Gordon, chairman and CEO.
The Company's specialty ingredients are aligned with key consumer trends: authentic ingredients, texture, nutrition and natural sweeteners, like stevia. "We have unique technology capabilities to enable innovation in specialty ingredients and we are making significant investments in R&D and capacity expansion," said Jim Zallie, vice president global specialties.
According to CFO Jack Fortnum, specialty ingredients are growing faster and command higher margins than the Company's core products. "The focus on specialty ingredients will significantly impact margin expansion and earnings growth. Our objective is to generate continued low-double-digit EPS growth over the long-term, as we have over the last 15 years," he said.
Other long-term objectives include driving margin expansion by two percentage points and more than 10 percent return on capital employed.
The announcement comes weeks after Ingredion, formerly known as Corn Products International, reduced its 2014 profit forecast, citing cost pressures in Argentina and the softer economy in Brazil. The bulk of Ingredion's business is selling products such as starches and sweeteners to food companies. It also sells its products to companies that make items such as drinks, pharmaceuticals, animal feed and paper products.
Shares of Ingredion fell 28 cents, or 0.3 percent, to $81.34 after hitting a new high of $81.86 earlier in the day.
Ingredion said it expects specialty products to make up 27 to 30 percent of its sales by 2019, up from about 23 percent in 2014. Specialty products include products such as texturizers for food and sweeteners such as stevia. As part of its focus on specialty products, Ingredion last month announced plans to buy Penford, a maker of specialty starches, for about $340 million.
Ingredion said it expects 2 to 4 percent sales growth each year, with stronger growth coming from outside North America. Ingredion expects annual growth in North America of 1 to 3 percent, while growth in the Europe, Middle East and Africa region is likely to be as high as 6 to 8 percent. North America makes up about 54 percent of its sales now and should account for 50 percent of sales in five years, the company reported.
