High corn costs continue to hit MGPI

10-Nov-2011 - Last updated on 10-Nov-2011 at 11:17 GMT

Related tags Maize

US corn production fell this year

MGP Ingredients has reported a net loss of $5.5m in the first quarter, which the company said was a result of some of the same factors that hit the company in the previous quarter, including high corn costs.

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.

1 comment

Corn allergies

Posted by Donnie, 10 November 2011 - 18:04 GMT

I've always been allergic to corn, and many other people have been allergic to it, too. However, I am amazed at the amount of new people who are becoming allergic to corn. This includes babies and small children. Corn is used in so many foods and non-food products, and not labeled as corn, that it is impossible to avoid it. But, we avoid as much as possible. It will only get worse, as more corn is dumped into everything. And companies that ignore the many people who are allergic to corn, will lose sales. We won't buy all the corny foods and products that make us sick. And if companies won't tell us if corn is in their products, as additives, processing and packaging aids, we will avoid them.

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