National Starch Acquisition Costs Hit Corn Products Q4 Earnings

For the full year, gross profit rose 39 percent from $520 million to $724 million and gross profit margin increased to 16.6 percent compared to 14.2 percent in 2009. This was largely a result of organic volume growth, better utilization rates, lower input costs and the National Starch business.

2/18/2011 --- Corn Products International, Inc. has reported that fourth quarter diluted earnings per share (EPS) declined 9 percent to $0.67 compared to $0.74. The fourth quarter of 2010 included $0.38 of charges resulting from acquisition, integration and other costs related to National Starch. Excluding these items, adjusted EPS rose 42 percent from $0.74 to $1.05 in the quarter.

For the full year, reported EPS was up 307 percent to $2.20 from $0.54 in 2009. Full year 2009 EPS included $1.47 of impairment and restructuring charges while full year 2010 included $1.04 of charges related to impairment and restructuring expenses as well as acquisition, integration and other costs related to National Starch. Excluding these items from both periods, full year adjusted EPS was up 61 percent from $2.01 to $3.24 for the year. For both the quarter and full year, National Starch operations had an estimated positive EPS impact of $0.23.

"We're pleased to report strong results for the full year, primarily driven by organic volume growth, lower input costs, higher utilization rates and the impact of owning National Starch for the entire fourth quarter," said Ilene Gordon, Chairman, President and Chief Executive Officer. "Our performance reflects the ongoing benefits of executing against our Strategic Blueprint and achieving meaningful cost reductions. Looking ahead, we see substantial opportunities to generate further growth from an improving portfolio particularly in specialty products from National Starch as well as ongoing geographic expansion."

Fourth quarter net sales rose 47 percent from $959 million to $1.41 billion. The increase is attributable to higher volumes of $416 million which were largely a result of an incremental $351 million of sales associated with the National Starch business, $20 million of improved pricing and $12 million from favorable foreign exchange rates. The company managed through higher input costs while also delivering incremental volumes in all regions.

Net sales for the full year rose 19 percent from $3.67 billion to $4.37 billion, driven by $772 million of incremental volume of which $351 million relates to National Starch, and a $161 million benefit from foreign exchange. These amounts were partially offset by a $238 million decline in price/mix, reflecting the normal relationship between lower corn costs and the corresponding decline in selling prices.

Gross profit increased by 51 percent in the fourth quarter from $163 million to $246 million, expanding the gross profit margin from 17.0 percent in the year ago period to 17.5 percent this year. The improvement in gross profit and gross profit margin was primarily driven by the National Starch business and the improvement in North America, South America and Asia.

For the full year, gross profit rose 39 percent from $520 million to $724 million and gross profit margin increased to 16.6 percent compared to 14.2 percent in 2009. This was largely a result of organic volume growth, better utilization rates, lower input costs and the National Starch business.

Fourth quarter operating income was up 4 percent from $99 million to $103 million. On an adjusted basis, excluding acquisition costs of $18 million and charges of $28 million largely related to the fair value mark-up of acquired inventory, non-GAAP operating income for the fourth quarter was $148 million, up 49 percent from $99 million in the same period last year. The primary driver of the increase was $42 million of incremental operating income from the National Starch business. Organic volume growth, improved price/mix and favorable foreign exchange rates also contributed to the increase.

Operating income for the full year increased 122 percent from $153 million to $339 million. Non-GAAP operating income, adjusted to exclude restructuring and acquisition-related costs, rose 53 percent from $278 million to $426 million.

EPS for 2011 is expected to be in a range of $3.60 to $3.90. The guidance includes the impact of the National Starch acquisition for the full year and approximately $15 million of acquisition-related synergies that are expected to be offset by about $30 million of integration costs. The Company continues to expect to achieve synergies of $20 million on an annualized basis by the end of 2011 and $50 million on an annualized basis by the end of 2012.

The EPS guidance also does not include the impact of $58.4 million received in January 2011 from the Government of Mexico pursuant to an award rendered in the Company's favor by a North American Free Trade Agreement (NAFTA) Tribunal in 2009.

Net sales are expected to increase to $6 billion in 2011.

The projected tax rate for the full year is between 32 percent and 34 percent.

Interest expense is expected to be between $85 and $90 million, up from $64 million in 2010 as a result of debt issued to acquire National Starch.

Capital expenditures are anticipated to be between $280 and $300 million and will support growth investment across the organization, particularly in South America.