July 28, 2010

Corn Products International reports 2010 second-quarter results

Corn Products International Inc., a leading global provider of agriculturally derived ingredients for diversified markets, has reported 2010 second-quarter net income of US$37 million, or US$0.48 per diluted share ("EPS") compared to a net loss of US$85 million, or US$1.13 EPS in the same period last year.

The second-quarter 2010 results include an US$18 million charge, or US$0.23 EPS, from the impairment of the company's plant in Llay-Llay, Chile, and an after-tax charge of US$3 million, or US$0.04 EPS, related to the pending National Starch acquisition. The second-quarter 2009 results include after-tax impairment and restructuring charges of US$110 million, with a negative EPS impact of US$1.47.

Excluding National Starch acquisition costs and impairment and restructuring charges, second-quarter 2010 adjusted EPS was US$0.75, a 121% improvement over the second-quarter 2009 adjusted EPS of US$0.34. Diluted weighted average shares outstanding in the second quarter of 2010 were 76.6 million, up from 74.8 million in the same quarter last year.

"I am pleased to report that we had another very good quarter," said Ilene Gordon, chairman, president and CEO. "We saw strong volume recovery across all our regions. In North America, we continued to see strong demand from the beverage industry in Mexico. In South America, volume growth was led by our customers in the brewing, confectionary, processed foods, and packaging industries. Volume improvement in Asia/Africa was led by customer demand for sweeteners and starches in South Korea and the confectionary and textile industries in Pakistan."

Net sales of US$1 billion in the second quarter of 2010 increased 10% versus US$912 million in the prior-year period. The primary contributors to growth in net sales were a positive US$143 million from higher volumes and a positive US$44 million from stronger foreign currencies, partially offset by a negative US$96 million from lower price/mix. The price/mix decline was largely attributable to North America and reflected the normal correlation between lower corn costs and the corresponding decline in selling prices.

Second-quarter 2010 gross profit of US$164 million improved 47% versus US$112 million a year ago. The gross margin of 16.3% compared favorably to 12.2% last year. The improvement in gross profit was attributable to cost improvement due to higher utilisation rates, lower unit corn costs, cost reduction programmes, and stronger foreign currencies.

Operating expenses in the second quarter were US$73 million, including US$4 million of cost related to the pending acquisition of National Starch. Excluding the National Starch acquisition costs, operating expenses were US$69 million, or 6.9% of net sales, versus US$61 million, or 6.7% of net sales, last year. The increase in operating expenses reflects a return to more historical run rates, the impact of stronger currencies, and higher costs.

Operating income for the second quarter of 2010 was US$77 million, versus an operating loss of US$73 million last year. Second quarter 2010 results include an asset impairment charge for the company's plant in Chile. The Llay-Llay plant suffered damage during a major earthquake that occurred in Chile on February 27, 2010. After receiving a completed engineering report in the second quarter, the company recorded an impairment charge of US$18 million. Excluding this impairment charge and US$4 million of costs related to the pending National Starch acquisition, second quarter 2010 adjusted operating income was US$99 million, a 90% improvement compared to US$52 million last year, excluding US$125 million in impairment and restructuring charges.

Net financing costs in the second quarter of 2010 were US$7 million versus US$11 million last year, down US$4 million on a combination of lower debt, higher cash balances and a positive US$2.5 million swing in foreign exchange. The second-quarter 2010 tax rate was 44.3% versus 1.1% last year, reflecting the impact of the impairment charge in 2010, the 2009 impairment and restructuring charges and National Starch acquisition-related costs along with changes in earnings mix and discrete items.