Strong Corn Products results prompt 'best year ever' forecast

By staff reporter

- Last updated on GMT

Related tags Corn products North america Corn syrup High-fructose corn syrup

Corn Products International has again reported strong growth, with
its third quarter results reflecting a continued good performance
from its North American business.

The agribusiness firm saw a 10 percent increase in net sales for the quarter ended September 30 2006 to $674m, compared to $612m in the equivalent period last year.

The company, which is a leading producer of dextrose, starch, high fructose corn syrup and glucose to the food industry, said that its strong results were a result of good volume sales as well as favorable currency translations and price/product mix.

Net income of $37m in the third quarter of 2006 rose 60 percent versus $23m last year.

Profits were up 28 percent, reaching $112m, compared to last year's $88m. As in the first and second quarters, Corn Products International said its third-quarter gross profit improvement was primarily due to the implementation of higher prices in North America. These were as a result of higher corn and energy costs.

According to the firm's chairman Sam Scott, the latest results are quarterly records for earnings and net sales, and have prompted the company to forecast 2006 to be its "best year ever".

The key driver to the company's strong performance was its North American business, which saw sales of $411m, reflecting a 10 percent versus $373m in 2005. Growth was primarily due to favorable volumes and improved price/product mix, said Corn Products International. Operating income of $38m rose 64 percent.

South American sales also increased by 9 percent to reach $170m, compared with $155m a year ago.

"Strong volume growth, along with slightly favorable currency translations, more than offset a reduction in price/product mix. Operating income of $22m fell slightly versus $23 million in the prior year, but increased sequentially from $17m in the second quarter of 2006, confirming earlier expectations for improving second half results in the region, particularly in Brazil,"​ said the firm.

In Asia and Africa, sales were up 11 percent to $94m, compared to $84m last year. Despite an unfavorable price/product mix, the region reported a good performance due to higher volumes, as well as currency appreciation, primarily the South Korean won. Operating income of $15m improved slightly from $14m last year. Continuing strong results in Pakistan and an improvement in South Korea drove the increase.

"Our North American region clearly remains the driver for most of our operating income improvement in 2006,"​ said Scott.

"We continue to see a second half recovery in our South American results, a trend we previously expected. Conditions in Brazil are gradually improving. Asia/Africa's performance is steady."

The company also disclosed that it has signed a stock purchase agreement to acquire Industrial Peru-Derivados del Maiz S.A. - DEMSA, a corn refiner in Peru. The transaction is expected to close by the end of November 2006.

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