Corn Products’ profits triple in Q1

02-May-2011 - Last updated on 03-May-2011 at 09:09 GMT

Related tags National starch North america

Corn Products International has seen profits more than triple in the first quarter after passing on higher prices for its products and receiving a payment from the Mexican government to settle a trade dispute.

The company reported net income of $155.5m for the first quarter ended March 31, up from $44.9m for the prior year period. Sales were up 54 percent in the quarter to $1.54bn, from $995m last year.

Corn Products’ chairman, president and CEO Ilene Gordon said that the company had benefited from good performance across the entire business, including from recently acquired National Starch, which it announced it would buy from Dutch chemicals firm AkzoNobel in June 2010.

She said: “These results reflect the strength of our business model which takes a regional approach with a global perspective combined with a prudent commodity risk management philosophy to deliver long-term performance. Looking ahead, we continue to expect another year of earnings growth. We also plan to continue to invest in our business for future growth through capital expansions in key markets like Brazil, cost savings programs, and new product development leveraging our acquired R&D capability."

The company increased its full year earnings per share guidance by $1.25, to a range of $4.85 to $5.15. This includes $0.75 related to the North American Free Trade Agreement dispute, and $0.50 from operations, the company said. Corn Product’s shares hit an all-time high of $57.91 on Monday following the news.

On a conference call discussing the results, Gordon said that the company had been able to pass through higher prices to its customers, even as corn prices continue to rise. She said that the company continues “to move from more basic products to more specialized offerings that command a higher selling price.”

Gordon added that this strategy has been particularly successful for driving growth in South America, where sales increased 32 percent to $368m during the quarter, and said: “The National Starch acquisition gives us a nice catalyst to accelerate that transition in North America, Asia-Pacific and Europe.”

North America is Corn Products’ largest region by revenue, and sales there rose 44 percent from $541m to $780m, which the company attributed to increased volumes associated with the National Starch business.