Ingredion has reported that its first quarter 2014 reported EPS fell 32% to $0.96 from $1.41 in the first quarter 2013. The company said that it maintains full year earnings per share guidance of $5.35 to $5.75 in spite of higher-than-expected weather-related costs and increased anticipated negative impact from foreign exchange rates, and that it continues to expect operating income to increase in all four regions for the full year.
“As we expected and communicated in our outlook, the first quarter was down sharply compared to the year ago period,” said Ilene Gordon, chairman, president and chief executive officer. “As expected, Argentina was down significantly as we begin to lap the economic and political issues that have led to a severe cost squeeze. In North America, the impact of extreme winter weather conditions on operating, energy and transportation costs persisted throughout the quarter and resulted in worse-than-anticipated operating income. Also as forecast, the layout of our corn costs for our fixed price contracts resulted in year-over-year unfavourability. “
“Also in-line with our expectations for the quarter, volumes were positive in South America, Asia Pacific and EMEA. At the same time, operating income was up in Asia Pacific and EMEA while South America showed continued year-over-year sequential improvement.”
“Our operating plan anticipated this slow start to the year and we expect year-over-year results to improve in each quarter as the year unfolds. As such, we are maintaining our full year EPS and operating income guidance,” Gordon added.
Sales were down 14% as a result of currency devaluations and negative price/mix which was a result of lower raw material costs partially offset by a slight increase in volume.
Operating income was $122 million, a 30% decrease compared to $175 million in the first quarter of 2013. The decline was primarily due to soft results in North America caused by costs associated with extreme weather and the layout of fixed price contract corn hedges, and continued weakness in Argentina. Strength in Asia Pacific and EMEA helped partially offset the decline.
