Corn Products content despite costs and volume drop
The Illinois-based corn refiner and supplier of sweeteners and starches had a bumper quarter this time last year, when it reported record net income of $88m and earnings of $1.15 per diluted common share.
In comparison, the most recent quarter brought in net income of $53m, or $0.70 per diluted share. The drop is attributed to corn costs (gross corn costs were up 8 per cent over last year) and currency conversions that have not swung in its favour. In addition, volume sales in North America have been “softer”.
But Ilene Gordon, chairman, president and CEO, pointed out that the quarter was the company’s fourth best ever, trailing only the first three quarters of 2008 before the economic downturn.
“We are pleased with the overall results and the improving trend line in certain parts of the world,” she said.
In particular, Gordon drew attention to improved volumes from South America. The improvement did not translate into sales growth however (11 per cent down, to $271m), as the currency story took out some $33m.
The balance sheet has remained in healthy shape, with total debt at $695m at end September (compared to $866m at the end of last year) and cash and cash equivalents at $161m (compared to $107).
Remaining confident that it is weathering the recession well, Corn Products has narrowed its 2009 guidance in the higher of the Q3 performance, to between $1.80 and $2.00 per diluted share. This takes into consideration the tax impact of impairment and restructuring of $1.47 per dilute common share, taken in Q2.
The new range reflects expectations of ongoing volume weakness in Q4 and weaker demand and volume pressure in Asia. On the up side, currencies are expected to shift back into Corn Products’ favour, and it expects to receive better prices for its co-products.
