WESTCHESTER, ILL. โ Ingredion Inc.โs โnimbleness to adjustโ its production to anticipated shifts in customer demand led to robust profit growth and more cash from operations in the second quarter of fiscal 2023, said James P. Zallie, president and chief executive officer.
Net income for the quarter ended June 30 was $163 million, equal to $2.46 per share on the common stock, up 15% from $142 million, or $2.14 per share, in the same period a year ago.
Quarterly sales increased to $2.07 billion, up 1% from $2.04 billion the previous year.
โOur performance this quarter demonstrates the value of a diversified portfolio, where North Americaโs strength in core ingredients and EMEAโs strength in specialties contributed to record second-quarter net sales and operating income,โ Mr. Zallie noted during an Aug. 8 conference call with analysts. โThese results are particularly noteworthy given the strength of last yearโs second-quarter performance and demonstrate that we maintain our ability to price and pass through significant raw material inflation.โ
Mr. Zallie said the companyโs specialty ingredients net sales increased 3% in the quarter behind better price mix. The company also benefited from more collaborations with customers seeking to improve the affordability of recipes, he said.
Another recent development is the creation and launch of a snacking innovation center, which Mr. Zallie said โseeks to capture additional growth opportunities for Ingredion in the global snacking category.โ He said the category has been growing 3% to 5% over the past five years and the segment presents an โexcellent opportunityโ for Ingredion to leverage its complete solutions capability across specialty starches, plant-based proteins and sweeteners.
โOur snacking experts have deep technical proficiency that allows them to engage with customers in new ways, providing proprietary insights and market-ready prototypes across a variety of snack applications,โ he said. โThis collaboration has helped us develop more projects with larger snack companies globally and has created a multimillion-dollar pipeline tapping into the snacking categoryโs high growth potential.โ
Turning to a breakdown of its geographic segments, Ingredion experienced strength in North America, Asia Pacific, and Europe, Middle East, and Africa (EMEA) during the quarter, while South America faced challenges.
In North America, the companyโs largest business unit, second-quarter operating income was $197 million, up 22% from $161 million in the same period of 2022. Sales totaled $1.34 billion, an increase of 5% from $1.28 billion.
โThe increase was driven by strong price mix as well as strengthening core ingredient sales,โ James Derek Gray, executive vice president and chief financial officer, said during the conference call.
Operating income in the South America segment was $23 million in the second quarter, down 41% from $39 million the previous year. Sales were $257 million, down 11% from $290 million a year ago.
โSouth Americaโs operating income was down 41% to $23 million driven primarily by the impact of higher inventory carrying costs in Brazil from last seasonโs corn costs, some lower volumes and foreign exchange headwinds in the Argentina JV results,โ Mr. Gray said.
For the six months ended June 30, Ingredion net income was $354 million, or $5.35 per share, up 30% from $272 million, or $4.08 per share, in the first six months of 2022.
Sales for the six-month period were $4.21 billion, up 7% from $3.94 billion.
Ingredion said it now expects full-year sales to be up mid- to high single digits, reflecting softer sales volume and the anticipated layout of corn costs. Cash from operations for fiscal 2023 is expected to be in the range of $600 million to $700 million, up from an earlier forecast of $550 million to $650 million. Full-year 2023 adjusted EPS guidance now is expected to be in the range of $8.80 to $9.40, up from $8.70 to $9.40, Ingredion said.
