Corn Products International, Inc. Reports First Quarter 2005
Earnings Provides Annual Guidance; EPS Expected to Grow 7-15
Percent Over Last Year's $1.25 WESTCHESTER, Ill., April 19
/PRNewswire-FirstCall/ -- Corn Products International, Inc.
(NYSE:CPO) today announced first quarter 2005 results. For the
quarter ended March 31, 2005, the Company reported diluted earnings
per share of $0.22, as compared to diluted earnings per share of
$0.35 in the first quarter of 2004. The Company's results for the
first quarter of 2005, compared with the prior year period, were as
follows: -- Net sales were $567 million, up from $550 million --
Operating income was $35 million, down from $54 million -- Net
income was $17 million, down from $26 million Commenting on the
quarter, Sam Scott, chairman, president and chief executive
officer, said, "As we indicated with the press release on April 5,
this was obviously a challenging quarter, and we are now in a
position to provide detail about it. While the year-over-year
comparison is a tough one, since the first quarter of 2004 was the
second-strongest quarter of last year, I am optimistic that the
remaining three quarters of this year will be back on track to
deliver another year of growth." BUSINESS BREAKDOWN BY REGION On a
regional basis, results for the first quarter of 2005, compared to
the prior year period, were as follows: In North America: -- Net
sales were $344 million, up from $339 million -- Volume increased 5
percent -- Operating income was $3 million, down from $24 million
Increased high fructose corn syrup (HFCS) sales to beverage
customers in Mexico led to the region's higher net sales for the
quarter. Pricing across the region was lower compared to the first
quarter of 2004, with co-product values leading the decline.
Unexpected outbound freight rate increases driven by the soaring
cost of fuel also dragged down revenues. The year-over-year margin
declines were caused primarily by higher net corn and energy costs.
Net corn costs were higher due to lower co-product values, which
had the largest negative impact, and higher gross corn costs, which
were due to the timing of corn purchased for contracted business.
In addition, natural gas prices were substantially higher than last
year's first quarter. Also contributing to the decline in margins,
but to a much lesser extent, were power problems in several plants
in the US and Canada, which resulted in an unexpected increase in
manufacturing costs. The Company believes these manufacturing
problems are behind it. The Mexican business, with the resumption
of HFCS sales, helped to offset the results coming from the US and
Canadian businesses. In South America: -- Net sales were $141
million, up from $136 million -- Volume decreased 2 percent --
Operating income was $27 million, up from $23 million Net sales
were up 3 percent, aided by stronger regional currencies that more
than offset a slight drop in pricing, caused primarily by
co-products. Sales volume in Brazil increased, but softer volumes
in the Andean region resulted in a 2-percent overall decline.
Operating income of $27 million is up 15 percent over the same
period last year. The quarter results are reflective of the strong
businesses in Brazil and the Southern Cone. In Asia/Africa: -- Net
sales were $82 million, up from $75 million -- Volume declined 8
percent -- Operating income was $13 million, down from $17 million
The increase in net sales of 9 percent was due primarily to
improved pricing and favorable currencies in the region, which more
than offset the volume decline coming from South Korea. Operating
income was impacted by higher raw materials costs. With the South
Korean economy beginning to recover and the higher raw material
costs fading, operating margins continued to improve as predicted
throughout 2004. Operating margins in the region are 16.4 percent
this quarter and have improved 540 basis points from the third
quarter of last year. On a corporate level, financing costs for the
first quarter of 2005 were $9 million, which were essentially flat
compared to the first quarter of 2004. The Company's effective
income tax rate was 33.5 percent, compared to 36 percent last year.
Cash provided by operations for the first quarter of 2005 was $29
million. Total debt was $557 million at March 31, 2005, down $11
million from December 31, 2004. OUTLOOK "We are confident that our
Company will rebound from this disappointing first quarter," said
Scott. "We expect the last nine months of this year to outperform
the same period in 2004. "We also anticipate that our results in
North America will improve as the year goes on, as HFCS sales in
Mexico continue, corn costs decline and manufacturing expenses
return to more normal levels. Year-over-year performance in this
region is expected to be fueled by the increase in HFCS sales in
Mexico. This will be partially offset by a significant drop in the
Canadian business. Because of the first quarter problems, operating
margins and return on capital employed are expected to decline
slightly in the US business. "The outlook for the balance of the
Company's businesses in South America and Asia/Africa continues to
be positive, led by Asia/Africa. "For the full year 2005, we
anticipate that the Company's diluted EPS will increase in a range
of 7 percent to 15 percent over 2004's $1.25 full-year diluted EPS
on a GAAP basis. We expect the ban on US corn gluten feed that was
put in place on April 15 by the European Union to be resolved
quickly and to have minimal impact to this year's results," Scott
concluded. ABOUT THE COMPANY Corn Products International, Inc. is
one of the world's largest corn refiners and a major supplier of
high-quality food ingredients and industrial products derived from
the wet milling and processing of corn and other starch- based
materials. The Company is the number-one worldwide producer of
dextrose and a leading regional producer of starch, high fructose
corn syrup and glucose. In 2004, the Company recorded net sales of
$2.3 billion with operations in 16 countries at 27 plants,
including wholly owned businesses, affiliates and alliances.
Headquartered in Westchester, Ill., it was founded in 1906. The
Company is listed on the New York Stock Exchange under the symbol
CPO. Additional information can be found on the World Wide Web at
http://www.cornproducts.com/ . This release contains or may contain
forward-looking statements within the meaning of Section 27A of the
Securities Exchange Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company intends these forward looking
statements to be covered by the safe harbor provisions for such
statements. These statements include, among other things, any
predictions regarding the Company's future financial condition,
earnings, revenues, expenses or other financial items, any
statements concerning the Company's prospects or future operation,
including management's plans or strategies and objectives therefore
and any assumptions underlying the foregoing. These statements can
sometimes be identified by the use of forward looking words such as
"may," "will," "anticipate," "believe," "plan," "project,"
"estimate," "expect," "intend," "continue," "pro forma," "forecast"
or other similar expressions or the negative thereof. All
statements other than statements of historical facts in this report
or referred to or incorporated by reference into this report are
"forward-looking statements." These statements contain certain
inherent risks and uncertainties. Although we believe our
expectations reflected in these forward-looking statements are
based on reasonable assumptions, stockholders are cautioned that no
assurance can be given that our expectations will prove correct.
Actual results and developments may differ materially from the
expectations conveyed in these statements, based on various
factors, including fluctuations in worldwide commodities markets
and the associated risks of hedging against such fluctuations;
fluctuations in aggregate industry supply and market demand;
general political, economic, business, market and weather
conditions in the various geographic regions and countries in which
we manufacture and/or sell our products, including fluctuations in
the value of local currencies, energy costs and availability,
freight and shipping costs, and changes in regulatory controls
regarding quotas, tariffs, taxes and income tax rates; labor
disputes; genetic and biotechnology issues; changing consumption
preferences and trends; increased competitive and/or customer
pressure in the corn- refining industry; the outbreak or
continuation of hostilities including acts of terrorism; stock
market fluctuation and volatility; and the resolution of the
uncertainties resulting from the Mexican HFCS tax. Our
forward-looking statements speak only as of the date on which they
are made and we do not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of the statement. If we do update or correct one or more
of these statements, investors and others should not conclude that
we will make additional updates or corrections. For a further
description of risk factors, see the Company's most recently filed
Annual Report on Form 10-K and subsequent reports on Forms 10-Q or
8-K. CORN PRODUCTS INTERNATIONAL, INC. Condensed Consolidated
Statements of Income (Unaudited) (All figures are in millions,
except per share amounts) Three Months Ended Change % March 31,
2005 2004 Net sales before shipping and handling costs $613.3
$592.3 4% Less: shipping and handling costs 46.8 41.9 12% Net sales
566.5 550.4 3% Cost of sales 494.0 455.9 8% Gross profit 72.5 94.5
-23% Operating expenses 39.3 40.3 -2% Other income, net 2.2 - 100%
Operating income 35.4 54.2 -35% Financing costs 9.5 9.5 0% Income
before taxes 25.9 44.7 -42% Provision for income taxes 8.7 16.1
17.2 28.6 -40% Minority interest in earnings 0.7 2.9 -76% Net
income $16.5 $25.7 -36% Weighted average common shares outstanding:
Basic 75.1 72.5 Diluted 76.5 73.4 Earnings per common share: Basic
$0.22 $0.35 -37% Diluted $0.22 $0.35 -37% Note: All amounts per
common share and the number of common shares for all periods
presented have been retroactively adjusted to reflect the 2-for-1
stock split effective January 25, 2005. CORN PRODUCTS
INTERNATIONAL, INC. Condensed Consolidated Balance Sheets (In
millions, except share amounts) March 31, December 31, 2005 2004
(Unaudited) Assets Current assets Cash and cash equivalents $98
$101 Accounts receivable - net 286 284 Inventories 220 258 Prepaid
expenses 14 11 Deferred income tax assets 10 30 Total current
assets 628 684 Property, plant and equipment - net 1,203 1,211
Goodwill and other intangible assets 360 353 Deferred income tax
assets 49 42 Investments 10 9 Other assets 64 68 Total assets
$2,314 $2,367 Liabilities and equity Current liabilities Short-term
borrowings and current portion of long-term debt $77 $88 Accounts
payable and accrued liabilities 285 374 Total current liabilities
362 462 Non-current liabilities 106 116 Long-term debt 480 480
Deferred income taxes 177 177 Minority interest in subsidiaries 18
18 Redeemable common stock (1,227,000 shares issued and outstanding
at March 31, 2005 and December 31,2004) stated at redemption value
33 33 Stockholders' equity Preferred stock -- authorized 25,000,000
shares -- $0.01 par value, none issued - - Common stock --
authorized 200,000,000 shares -- $0.01 par value -- 74,092,774
issued at March 31, 2005 and December 31, 2004 1 1 Additional
paid-in capital 1,058 1,047 Less: Treasury stock (common stock;
132,479 and 792,254 shares on March 31, 2005 and December 31, 2004,
respectively) at cost (1) (4) Deferred compensation -- restricted
stock (2) (2) Accumulated other comprehensive loss (290) (321)
Retained earnings 372 360 Total stockholders' equity 1,138 1,081
Total liabilities and equity $2,314 $2,367 CORN PRODUCTS
INTERNATIONAL, INC. Condensed Consolidated Statements of Cash Flows
(Unaudited) Three Months Ended March 31, (In millions) 2005 2004
Cash provided by (used for) operating activities: Net income $17
$26 Adjustments to reconcile net income to net cash provided by
(used for) operating activities: Depreciation and amortization 26
25 (Increase) decrease in trade working capital (20) 15 Other 6 9
Cash provided by operating activities 29 75 Cash provided by (used
for) investing activities: Capital expenditures, net of proceeds on
disposal (20) (15) Payments for acquisitions (3) - Other - 1 Cash
used for investing activities (23) (14) Cash provided by (used for)
financing activities: Payments on debt, net (13) (16) Issuance of
common stock 10 4 Dividends paid (including to minority interest
shareholders) (6) (4) Cash used for financing activities (9) (16)
(Decrease) increase in cash and cash equivalents (3) 45 Cash and
cash equivalents, beginning of period 101 70 Cash and cash
equivalents, end of period $98 $115 CORN PRODUCTS INTERNATIONAL,
INC. Supplemental Financial Information (Unaudited) (Dollars in
millions, except per share amounts) I. Geographic Information of
Net Sales and Operating Income Three Months Ended Change March 31,
2005 2004 % Net sales North America $343.6 $338.9 1% South America
140.6 135.9 3% Asia/Africa 82.3 75.6 9% Total $566.5 $550.4 3%
Operating income North America $2.9 $24.0 -88% South America 26.9
23.4 15% Asia/Africa 13.5 16.6 -19% Corporate (7.9) (9.8) -19%
Total $35.4 $54.2 -35% II. Estimated Source of Diluted Earnings Per
Share for the Three Months Ended March 31 The following is a list
of the major items that impacted first quarter results. The amounts
are calculated on a net after-tax basis and attempt to estimate
total business effects. Earnings Per Share Three Months Earnings
Per Share -- March 31, 2004 $0.35 Change Volumes 0.02 Operating
margin (0.20) Foreign currency translation 0.02 Effective tax rate
0.01 Minority interest 0.03 Shares outstanding (0.01) Net Change
(0.13) Earnings Per Share -- March 31, 2005 $0.22 III. Capital
expenditures Capital expenditures were $20 million and $15 million
for the quarters ended March 31, 2005 and 2004, respectively.
DATASOURCE: Corn Products International, Inc. CONTACT: Investors,
Richard Vandervoort, +1-708-551-2595, or Media, Mark Lindley,
+1-708-551-2602, both of Corn Products International, Inc. Web
site: http://www.cornproducts.com/
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