February 18, 2011

Corn Products' Q4 profit drops 7.6% on acquisition costs, revenue still up

Corn Products International Inc.'s Q4 profit slipped 7.6% on acquisition charges, while the company's adjusted earnings soared sharply on its Asia-Africa segment's higher volumes, lower input costs and triple-digit growth.

The results easily surpassed analysts' expectations for the quarter.

Corn Products, which supplies sweeteners and starches to food processors and industrial customers, has pursued a diversification strategy that included last year's US$1.3-billion takeover of National Starch, a maker of ingredients for soups, mayonaise, sauces and yogurt.

The company said in December it plans to spend US$75 million to US$100 million over the next few years to expand its Brazilian business, where demand from food, beverage and industrial customers is increasing. Beverage makers in Mexico have also driven up corn syrup demand even as some US food manufacturers switch to sugar because of perceived health concerns.

Corn Products reported a profit of US$52 million, or US$0.67 a share, down from US$56.3 million, or US$0.74 a share, a year earlier. The latest quarter included US$0.38 in charges stemming from acquisition costs and fair-value markups of acquired inventory. Revenue increased 47% to US$1.41 billion.

Analysts expected earnings of US$0.73 on revenue of US$1.1 billion.

Gross margin widened to 17.5% from 17%, mostly on improvement in North America, South America and Asia.

Sales in North America, the company's largest segment by revenue, rose 33%, while sales increased 23% in South America and jumped 119% in its Asia-Africa segment.

The grain processor also issued a full-year earnings forecast of US$3.60 to US$3.90 a share on revenue of US$6 billion. Wall Street had projected a per-share profit of US$3.73 on US$5.73 billion in revenue.

Corn Products shares closed Wednesday at US$48.60 and were inactive premarket. The stock has gained 48% over the past year.