High corn costs continue to hit MGPI
For the prior year period, the company reported net income of $5m. Sales for the quarter were up 34% to $76.1m from $57m in Q1 last year. The company said most of this increase was due to higher sales of food grade alcohol.
MGPI’s president and CEO Tim Newkirk said in a statement: “We continue to experience some of the same issues we faced in our fourth quarter of fiscal 2011, including higher raw material costs.”
According to USDA figures, US corn fields yielded the least corn per acre in eight years, and it predicts that stocks will hit their lowest level since 1996 by the start of next year’s harvest. US corn production was hit by flooding in the Midwest, which delayed planting, followed by extreme heat.
Newkirk said: "Our primary goal for the ingredients segment has been to improve profit margins. Following three quarters of sub-par performance, we succeeded in getting pre-tax margins back on a sound footing in the first quarter. However, this is only a starting point for this segment as we continue working to accelerate the sales and optimize the manufacturing of our specialty starches and proteins.”
He added that the company expects improved results from January 1, 2012, when new pricing is due to come into effect.
"Growing our sales into the consumer packaged goods market is our number one priority,” Newkirk said.
The company announced late last month that it would acquire Lawrenceburg Distillers Indiana, increasing its presence in distilled beverages, specifically bourbon and rye whiskey.
“Our integration teams are making significant progress in planning to transition the existing production facilities and their customers,” Newkirk said, adding that the company plans to complete the acquisition in early 2012.
