May 3, 2011

Corn Products International forecasts full-year profit

Corn Products International Inc. (CPO) altered its earnings guidance for 2011 on Monday (May 2), but officials said that it will be hard to match the first-quarter results through the entire year.

The corn processor and food ingredient company said its full-year gross profit margin will likely be around 18%, rather than the 20.4% it reported in the first quarter.

CPO has been able to pass through higher corn costs to customers, but the continued rise in costs will begin to reflect in the margins later, said Chief Financial Officer Cheryl Beebe. The company reported earnings tripled in the quarter.

Corn prices last month hit a record high, and for companies that forward-purchase corn, their costs will go up in the months ahead even if corn futures prices started to decline.

Still, the company raised its guidance by US$1.25 to US$4.85-US$5.15 a share. Of that increase, US$0.75 was due to proceeds from a NAFTA settlement related to a tax Mexico had imposed on beverages sweetened with high fructose corn syrup. NAFTA ruled that the tax was an unfair attempt by Mexico to protect its domestic sugar producers.

The increased guidance, and the company's strong first-quarter performance, was due to increased volumes and a better product mix, improved tax rates and the strength of the Brazilian real, Beebe said. Shares were recently up 2.1% to US$56.27.