Corn Products continues to benefit from National Starch acquisition

31-Jul-2011 - Last updated on 01-Aug-2011 at 15:12 GMT

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Corn Products International has seen a sharp rise in second quarter profits, largely on the back of its National Starch acquisition, but warned that higher corn costs could impact earnings in the second half.

The company posted lower than expected quarterly profits, of $79.3m, or $1.01 a share, up from $36.8m, or 48 cents a share, a year earlier. Net sales were up 58 percent to $1.58bn.

Analysts polled by Thomson Reuters had forecast profits of about $1.13 per share on net sales of $1.51bn. Nevertheless, the company reaffirmed its 2011 guidance, while noting a likely impact from higher corn costs.

“We had a 13 percent increase in net corn costs between the first and second quarters of this year and expect this trend to continue throughout the year,” chief financial officer Cheryl Beebe said in a conference call with investors.

Beebe pointed out that the National Starch acquisition contributed about $353 million worth of sales or about 60 percent of sales growth during the quarter.

Chairman, president and CEO Ilene Gordon said in a statement: “Corn Products delivered a very good second quarter and first half of 2011. As expected volumes were relatively stable as customers and consumers continue to deal with economic challenges in various markets. Our pricing remains strong as we manage through rising input costs.”

North America is Corn Products' largest region by revenue, and net sales rose 46 percent there in the quarter, driven largely by stronger volumes from the National Starch business. Meanwhile sales increased 36 percent in South America, 133 percent in Asia-Pacific, and 197 percent in Europe, Middle East and Africa (EMEA). The National Starch acquisition provides Corn Products with a new presence in markets in Europe and Australasia, as well as access to new technologies, and improved scale and capabilities in markets where it already has a presence.

Corn Products International said it would buy National Starch from Dutch chemicals firm AkzoNobel in June 2010 for $1.3bn.