WESTCHESTER, ILLINOIS, U.S. — Ingredion reported on July 30 that earnings for the second quarter were $106.7 million or $1.47 per share up from $102.6 million or $1.35 per share in the same quarter a year ago.

For the first six months of the year Ingredion reported earnings of $190.3 million or $2.62 per share up from $175.2 million or $2.31 per share in the same period a year ago.

“We are pleased with the second quarter results which were highlighted by higher specialty volumes, good operating efficiency, and strong earnings per share growth,” said Ilene Gordon, chairman, president and chief executive officer (CEO). “Although we experienced foreign-exchange headwinds across all four regions, our business model continues to work. In fact, operating income improved in North America, South America and Asia Pacific.”

Net sales were down 2% in the second quarter to $1.44 billion as a result of changes in foreign currency-exchange rates and the pass through of lower corn costs, partially offset by pricing in South America and acquisition-related volume growth. Year-to-date net sales were down 2% to $2.78 billion as a result of changes in foreign currency-exchange rates and the pass through of lower corn costs, partially offset by pricing in South America to compensate for currency headwinds and volume growth, both organic and acquisition-related.

Second quarter reported and adjusted operating income were $173 million and $180 million, respectively. These were 6% and 11% increases, respectively, compared to $163 million of reported operating income in the second quarter of 2014. The increases in operating income were primarily due to: Penford-related and strong specialty volumes; margin expansion in North America; and pricing actions 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 $312 million and $336 million, respectively. These were 10% and 18% increases, respectively, compared to $285 million of year-to-date 2014 reported operating income. The increases in operating income were primarily due to Penford-related and strong specialty volumes and margin expansion in North America.

North America’s second quarter operating income increased from $110 million to $127 million. Higher specialty and acquisition-related volumes, lower corn costs, and lower manufacturing expenses due to operational efficiencies accounted for the increase.

South America’s operating income in the second quarter was $20 million, up 22% or $4 million, largely as a result of increased pricing and good cost discipline, offset by the foreign-exchange impact, higher input costs, and weaker demand.

Asia Pacific’s second quarter operating income was $28 million, up slightly from a year ago. Year-to-date operating income was $54 million, also up slightly from a year ago. In both periods, foreign-exchange impacts were offset by increased volume and margin expansion.

Europe, Middle East and Africa’s second quarter operating income was $23 million, down from $25 million a year ago. Year-to-date operating income was $45 million, down $1 million from a year ago. In both periods, higher volumes and good cost management were offset by foreign-exchange impacts.
2015 adjusted EPS, including anticipated $0.08-$0.12 per share accretion resulting from the Penford and Kerr acquisitions but excluding acquisition-related costs, is expected to be in the range of $5.60 to $5.90 compared to adjusted EPS of $5.20 in 2014.

The guidance assumes: overall improvement in North America, modest improvement in Asia Pacific, South America in line, and EMEA down slightly given anticipated unfavorable changes in currency rates; an effective tax rate of 29%-31%; and earnings per share accretion attributable to the 2014 accelerated share repurchase program. Sales of higher-value specialty ingredients are expected to continue to contribute to margin expansion. In 2015, cash generated by operations and capital expenditures are expected to be approximately $650-$700 million and $300 million, respectively.

“We remain confident in our 2015 outlook. Strong specialty volumes, improved product mix, disciplined cost management, and the impacts of the first quarter acquisition of Penford Corporation are expected to drive bottom-line growth,” said Gordon.

“As we continue to execute our strategic blueprint, we are well positioned for further growth, especially in our higher-value ingredients that address key consumer trends. Our pending acquisition of Kerr Concentrates, Inc., a producer of natural fruit and vegetable concentrates, purees and essences, is another step to broaden our portfolio of wholesome, clean-label ingredient solutions, which consumers are increasingly demanding. The Penford integration remains on track for at least $20 million in annualized cost synergies and the underlying business is performing well. Our expectation for adjusted EPS for the year, including accretion resulting from both transactions, is narrowed to $5.60-$5.90, excluding the associated acquisition-related costs.”