July 23, 2008


Corn Products International logs record sales for 10th quarter


For the 10th consecutive quarter, net sales for Corn Products International reached a record level, garnering net sales of US$1.03 billion in the second quarter of 2008, a 20-percent increase versus US$857 million in the prior-year period.


The company reported record quarterly diluted earnings per share of US$0.90 for the second quarter ended June 30, 2008, a 36-percent increase compared with diluted earnings per share of US$0.66 a year ago.


Costs related with a pending merger with Bunge Limited also drew a 4-cent negative impact in this quarter's results.


Net income of US$68 million in the second quarter of 2008 improved 35 percent versus US$51 million in the prior year.


The company said the higher net sales were primarily the result of improved price/product mix.


Favourable foreign currency exchange rates would have given a further boost to income if it had not been offset by reduced volumes in the company's three geographic regions: North America, Asia and South America.


Gross profit of US$187 million in the second quarter of 2008 increased 20 percent compared with US$156 million a year ago due to significantly higher North and South American markets, which are seeing strong pricing actions.


The gross margin of 18.1 percent was unchanged versus last year.


Operating expenses as a percentage of net sales in the second quarter of 2008 declined to 7.1 percent compared with 7.6 percent a year ago. Merger-related expenses of approximately US$4 million were included in this year's operating expenses.


At the same time, operating income grew 28 percent, rising from US$91 million in 2007 to US$116 million in 2008.


The company managed to shave nearly 47 percent off net financing costs this quarter to US$6.9 million due to lower net interest expense and foreign currency translation gains.


In North America, net sales of US$609 million increased 14 percent from US$534 million in 2007 predominantly due to favorable price/product mix.


However, the economic slump meant volumes were unfavourable across the region.

Still, operating income of US$86 million grew 25 percent versus US$68 million last year. All three country businesses contributed to the increased profitability.


In South America, net sales of US$298 million rose 36 percent compared with US$219 million a year ago as a result of positive price/product mix and foreign currency translations.


Volumes were also lower in the region due to the Argentinean strikes and reduced uptake from Brazilian markets. Operating income of US$37 million grew 41 percent from US$26 million in the prior year due to a significant improvement in Brazil.


For the first six months of 2008, the company reported net income of US$133 million, or US$1.75 per diluted share, compared with net income of US$101 million, or US$1.32 per diluted share, last year. Gross profit and operating income increased 19 percent and 25 percent, respectively, versus the prior-year period.


Sam Scott, chairman, president and chief executive officer of Corn Products International is upbeat about the second-half, forecasting dividends in the second half of 2008 should be in the range of US$1.40 to US$1.60 versus $1.27 a year ago, which would be an increase of 10 to 26 percent.


Corn Products International is one of the world's largest corn refiners and a major supplier of food ingredients and industrial products derived from corn processing.

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