October 25, 2006

 

Corn products 3Q profit jumps 60 percent

 

 

Corn Products International's third-quarter profit surged 60 percent and raced past Wall Street's expectations, due mostly to sales gains in North America and the continued recovery in its South American market.

 

The organisation refines and processes corn and other starch-based materials. The quarterly earnings jumped to US$37 million, or 49 cents per share, from US$23.1 million, or 31 cents per share, during the same period last year.

 

Revenue grew 11 percent to US$733.4 million from US$663.6 million during the same period a year ago.

 

Sales in North America increased 10 percent to US$411 million from US$373 million a year ago, owing to favourable volumes and an improved mix in price and product. Sales in South America gained 9 percent to US$170 million from US$155 million last year. The company cited volume growth and a favourable currency exchange rate. Performance in Asia and Africa was steady, the company said.

 

The company raised its earnings forecast for the year to US$1.58 per share to US$1.62 per share, from a prior guidance of US$1.38 per share to US$1.48 per share, said Sam Scott, the company's chairman and CEO, pointing to the strong quarterly results.,

 

Net sales of US$674 million in the third quarter of 2006, a record quarterly level, improved 10 percent versus US$612 million in the prior-year period.

 

Gross profit of US$112 million in the third quarter of the current year increased 28 percent versus US$88 million a year ago.

 

Gross margins reached 16.6 percent in the third quarter of this year compared with 14.3 percent in 2005. An improvement in gross profit could be attributed to improved pricing in the North American region. Net corn costs during this period were slightly higher than last year, primarily from lower co-product values. Energy costs, as expected, also were higher than a year ago.

 

Higher operating expenses primarily resulted from variable incentive compensation, including the cost of stock option expensing, while net financing costs were lower than last year.

 

Operating income of US$65 million increased 24 percent versus US$52 million last year.

 

Net financing costs declined 27 percent from last year.

 

The tax rate of 34.5 percent compared with a tax rate of 44.9 percent a year ago. The variance was driven by the change in the mix between expected US and foreign income in the two years.