Grain News

Ingredion Reports 3Q Net Income of $86.3 Million, Down From $112.7 Million in 3Q 2012

Date Posted: October 30, 2013

Westchester, IL—Ingredion Incorporated (NYSE: INGR), a leading global provider of ingredient solutions to diversified industries, today reported results for the third quarter 2013.

Full Ingredion Report

"This was a disappointing quarter as many of the headwinds we faced in the second quarter persisted and in some cases accelerated.

"These challenges included volume softness, currency headwinds and higher costs," said Ilene Gordon, chairman, president and chief executive officer.

"Notably, two-thirds of the decline in operating income in the quarter was a result of the challenges in South America, particularly Argentina.

"Conditions remain very challenging in Argentina as political and economic actions have significantly increased costs while our ability to price through higher costs continues to be constrained."

"In the face of economic challenges, volume softness and the impact of last summer's drought in the U.S., our total business has held up well.

"And, looking longer-term, our early outlook for 2014 remains positive as we expect relief on raw material prices, improved volume performance, and sales and operating income from key capital investments," Gordon added.

Financial Highlights

• During the third quarter of 2013, net financing costs were $18 million versus $16 million in the year-ago period. The increase primarily reflected an increase in foreign currency transaction losses, partially offset by lower interest expense.

• The third quarter effective tax rate was 25.8 percent compared to 25.5 percent in the year-ago period. For the first nine months of 2013, the effective tax rate was 25.9 percent compared to 25.5 percent in the first nine months of 2012. The tax rates associated with the adjusted EPS in the third quarter 2012 and year-to-date 2012 were 26.8 percent and 29.7 percent, respectively.

• At September 30, 2013, total debt and cash and cash equivalents were $1.77 billion and $618 million, respectively, versus $1.80 billion and $609 million, respectively, at December 31, 2012.

• In the first nine months of 2013, cash flow generated by operations was $362 million, up $250 million from the end of the second quarter of 2013.

• Capital expenditures, net of disposals, were $202 million in the first nine months of 2013 and 2012.

• During the quarter, the Company repurchased 880,000 shares for approximately $56 million.

2013 Guidance

2013 EPS is expected to be in a range of $5.00 to $5.15 compared to adjusted EPS in 2012 of $5.57 and prior guidance of $5.10 to $5.40. (2012 reported EPS was $5.47.)

The updated guidance is based on the expectation that EPS for the fourth quarter 2013 will be $1.29 to $1.44.

The updated guidance anticipates ongoing cost pressures in Argentina; a generally soft consumer environment leading to volume softness across all regions; currency headwinds, primarily in Argentina and Brazil; and, an effective tax rate of approximately 27 percent.

Cash generated by operations is expected to be approximately $600 - 700 million in 2013.

The Company intends to continue executing its existing share repurchase authorization.

Capital expenditures in 2013 are anticipated to be in the range of $300 - 325 million.

These investments will support growth and cost reduction actions across the organization.

For more information, call 708-551-2602.

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