WESTCHESTER, Ill., July 25 /PRNewswire-FirstCall/ -- Corn Products
International, Inc. (NYSE:CPO), a leading global provider of
agriculturally derived ingredients for diversified markets, today
reported a 14 percent increase in net income to $30 million, or
$0.40 per diluted share, for the second quarter ended June 30,
2006, compared with net income of $26 million, or $0.35 per diluted
share, a year ago. 2006 second-quarter net sales improved 8 percent
to $645 million, a record quarterly level, versus $596 million in
the prior-year period. Higher volumes, favorable currency
translations and improved price/product mix contributed to the net
sales growth. Gross profit in the second quarter grew 16 percent to
$104.5 million, resulting in a 100-basis point expansion of gross
margins to 16 percent. As anticipated, gross corn costs were
favorable, co-product credits were lower, and energy costs were
higher than a year ago. Operating income of $57 million rose 10
percent from $52 million last year. The principal factor for the
Company's improved second quarter performance was the North
American region, which recorded operating margins of 9 percent
versus 6 percent in the second quarter of 2005. Higher operating
expenses were due primarily to variable incentive compensation,
including the cost of stock option expensing. Net financing costs
were lower than last year. "Our solid second quarter performance
gives us more confidence that 2006 should be a record year," said
Sam Scott, chairman, president and chief executive officer of Corn
Products International. "We're pleased with the improving
profitability in our North American region. Our South America
business still suffered from cost and pricing pressures in Brazil
and Argentina, but we see these conditions beginning to improve in
the second half. Asia/Africa performed as expected." Regional
Business Segment Performance Regional results for the quarter ended
June 30, 2006 were as follows: North America Net sales of $398
million grew 9 percent versus $366 million in 2005, driven largely
by improved price/product mix, as well as favorable volumes and
local currency. Operating income jumped 79 percent to $37 million.
All three country businesses posted stronger results. South America
Volume growth of 10.4 percent and regional currency appreciation,
partially offset by a 6.0 percent decline in price/product mix,
contributed to a 9 percent increase in net sales to $156 million.
Operating income fell 25 percent to $17 million from lower Brazil
and Argentina results. As in the first quarter, Brazil's
price/product mix decline was caused by the various factors that
restricted pricing flexibility. Higher net corn and energy costs
continued to impact Argentina's operating income. Asia/Africa This
division posted a 4 percent increase in net sales to $91 million.
Currency appreciation, primarily the South Korean won, and higher
volumes more than offset reduced price/product mix. Operating
income of $15 million compared with $16 million last year. A soft
economy continued to affect South Korea's performance, with weak
consumer demand for food and beverage products. The rest of the
region performed well, led by strong results in Pakistan. 2006
First Half Results For the first six months of 2006, the Company
reported net income of $54 million, or $0.71 per diluted share,
compared with net income of $43 million, or $0.56 per diluted share
last year. Significantly improved North American results more than
offset a decline in South America's performance and higher
corporate operating expenses. Net sales of $1.26 billion grew 8
percent as all three geographic segments posted increases. The
Company's effective tax rate for the first half of 2006 was 37.8
percent versus 34.5 percent in 2005. Balance Sheet and Cash Flow
Total debt to capital at June 30, 2006 was 27 percent versus 28
percent a year ago. Net debt (total debt minus cash) was $468
million at June 30, 2006 compared with $424 million at June 30,
2005. During the second quarter, the Company repurchased 862,800
shares of its common stock at an average price of $26.90 per share,
for a total cost of approximately $23.2 million. Outlook "We
continue to anticipate a 16 to 24 percent increase in diluted EPS
in 2006 over $1.19 in 2005," said Scott. "Since we expect a
stronger second half, the improvement will likely be near the high
end of this range. Regarding the Argo coal boiler project, we still
believe we are substantially on track to have the new boiler up and
running by the end of September. We plan to firm up our 2006 EPS
guidance when we release third quarter results in the latter part
of October. "Our North American region should account for
substantially all of the 2006 improvement as we still see lower
South American results for reasons previously described," Scott
said. "However, conditions in Brazil appear to be bottoming and
should gradually ease in the second half. Asia/Africa is on course
for steady results in 2006." On another matter, the Company
indicated that a hearing on its NAFTA claim against Mexico relating
to the discriminatory tax on beverages sweetened with high fructose
corn syrup (HFCS) was held during the week of July 10 to determine
whether Mexico has state responsibility with respect to the
Company's claim for damages. Although the timing of a decision by
the NAFTA Tribunal on the issue of state responsibility is not
known, no decision is expected for some time. Conference Call and
Webcast Corn Products International will conduct a conference call
today at 8:30 a.m. Eastern Time (7:30 a.m. Central Time) to be
hosted by Sam Scott, chairman, president and chief executive
officer, and Cheryl Beebe, vice president and chief financial
officer. The call will be broadcast in a real-time webcast. The
broadcast will consist of the call and a visual presentation
accessible through the Corn Products International web site at
http://www.cornproducts.com/ . The "listen-and-view-only"
presentation will be available to download approximately 60 minutes
prior to the start of the call. A replay of the webcast will be
available at http://www.cornproducts.com/ . Individuals without
Internet access may listen to the live conference call by dialing
719.457.2630. A replay of the audio call will be available through
Friday, August 4 by calling 719.457.0820 and using passcode
4910199. About the Company Marking its 100th anniversary in 2006,
Corn Products International 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, headquartered
in Westchester, Ill., is the number-one worldwide producer of
dextrose and a leading regional producer of starch, high fructose
corn syrup and glucose. In 2005, Corn Products International
reported net sales of $2.36 billion with operations in 15 countries
at 33 plants, including wholly owned businesses, affiliates and
alliances. For more information, visit http://www.cornproducts.com/
. Forward-Looking Statement This news 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," "should," "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
release or referred to in this release are "forward-looking
statements." These statements are subject to 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; fluctuations in the value of local currencies,
energy costs and availability, freight and shipping costs, and
changes in regulatory controls regarding quotas, tariffs, duties,
taxes and income tax rates; operating difficulties; boiler
reliability; 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 serious communicable disease or
hostilities including acts of terrorism; stock market fluctuation
and volatility; and our ability to maintain sales levels of HFCS in
Mexico. 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 these risks, see Risk
Factors included in our Annual Report on Form 10-K for the year
ended December 31, 2005 and subsequent reports on Forms 10-Q or
8-K. This news release also may contain references to the Company's
long term objectives and goals or targets with respect to certain
metrics. These objectives, goals and targets are used as a
motivational and management tool and are indicative of the
Company's long term aspirations only, and they are not intended to
constitute, nor should they be interpreted as, an estimate,
projection, forecast or prediction of the Company's future
performance. CORN PRODUCTS INTERNATIONAL, INC. Condensed
Consolidated Statements of Income (Unaudited) (In millions, except
per share amounts) Three Months Ended Six Months Ended June 30,
June 30, 2006 2005 Change % 2006 2005 Change % Net sales before
shipping and handling costs $701.0 $646.9 8% $1,366.8 $1,260.3 8%
Less: shipping and handling costs 56.1 50.7 11% 107.1 97.5 10% Net
sales 644.9 596.2 8% 1,259.7 1,162.8 8% Cost of sales 540.4 506.0
7% 1,062.4 1,000.1 6% Gross profit 104.5 90.2 16% 197.3 162.7 21%
Operating expenses 49.4 39.6 25% 97.2 79.0 23% Other income, net
2.0 1.2 67% 3.2 3.5 -9% Operating income 57.1 51.8 10% 103.3 87.2
18% Financing costs, net 7.6 9.5 -20% 14.2 19.0 -25% Income before
income taxes 49.5 42.3 17% 89.1 68.2 31% Provision for income taxes
18.3 14.8 33.7 23.5 31.2 27.5 13% 55.4 44.7 24% Minority interest
in earnings 1.1 1.0 10% 1.9 1.7 12% Net income $30.1 $26.5 14%
$53.5 $43.0 24% Weighted average common shares outstanding: Basic
73.9 75.2 74.0 75.1 Diluted 75.3 76.0 75.4 76.3 Earnings per common
share: Basic $0.41 $0.35 17% $0.72 $0.57 26% Diluted $0.40 $0.35
14% $0.71 $0.56 27% CORN PRODUCTS INTERNATIONAL, INC. Condensed
Consolidated Balance Sheets (In millions, except share and per
share amounts) June 30, December 31, 2006 2005 (Unaudited) Assets
Current assets Cash and cash equivalents $57 $116 Accounts
receivable - net 292 287 Inventories 294 258 Prepaid expenses 15 11
Deferred income tax assets 11 13 Total current assets $669 $685
Property, plant and equipment - net $1,311 $1,274 Goodwill and
other intangible assets 371 359 Deferred income tax assets 2 3
Investments 11 11 Other assets 57 57 Total assets $2,421 $2,389
Liabilities and equity Current liabilities Short-term borrowings
and current portion of long-term debt $71 $57 Deferred income taxes
1 1 Accounts payable and accrued liabilities 360 366 Total current
liabilities $432 $424 Non-current liabilities 106 110 Long-term
debt 454 471 Deferred income taxes 130 128 Minority interest in
subsidiaries 17 17 Redeemable common stock (1,227,000 shares issued
and outstanding at June 30, 2006 and December 31, 2005) stated at
redemption value 34 29 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 June 30, 2006 and December 31, 2005 1 1
Additional paid-in capital 1,063 1,068 Less: Treasury stock (common
stock; 1,951,581 and 1,528,724 shares at June 30, 2006 and December
31, 2005, respectively) at cost (49) (36) Deferred compensation -
restricted stock - (1) Accumulated other comprehensive loss (238)
(251) Retained earnings 471 429 Total stockholders' equity 1,248
1,210 Total liabilities and equity $2,421 $2,389 CORN PRODUCTS
INTERNATIONAL, INC. Condensed Consolidated Statements of Cash Flows
(Unaudited) For the Six Months Ended June 30, (In millions) 2006
2005 Cash provided by operating activities: Net income $54 $43
Adjustments to reconcile net income to net cash provided by (used
for) operating activities: Depreciation 55 52 Increase (decrease)
in trade working capital (66) 17 Other 8 1 Cash provided by
operating activities 51 113 Cash used for investing activities:
Capital expenditures, net of proceeds on disposal (76) (54)
Payments for acquisitions - (5) Other 1 - Cash used for investing
activities (75) (59) Cash used for financing activities: Payments
on borrowings, net (7) (27) Issuance (repurchase) of common stock,
net (17) 2 Dividends paid (13) (12) Cash used for financing
activities (37) (37) Effect of foreign exchange rate changes on
cash 2 1 Increase (decrease) in cash and cash equivalents (59) 18
Cash and cash equivalents, beginning of period 116 101 Cash and
cash equivalents, end of period $57 $119 CORN PRODUCTS
INTERNATIONAL, INC. Supplemental Financial Information (Unaudited)
(In millions, except per share amounts) I. Geographic Information
of Net Sales and Operating Income Three Months Ended Six Months
Ended June 30, Change June 30, Change 2006 2005 % 2006 2005 % Net
sales North America $397.9 $366.0 9% $774.1 $709.6 9% South America
155.6 142.6 9% 306.6 283.3 8% Asia/Africa 91.4 87.6 4% 179.0 169.9
5% Total $644.9 $596.2 8% $1,259.7 $1,162.8 8% Operating income
North America $36.9 $20.6 79% $61.3 $23.5 161% South America 16.6
22.1 -25% 36.3 49.0 -26% Asia/Africa 15.0 15.7 -4% 28.0 29.2 -4%
Corporate (11.4) (6.6) 73% (22.3) (14.5) 54% Total $57.1 $51.8 10%
$103.3 $87.2 18% II. Estimated Sources of Diluted Earnings Per
Share for the Three and Six Months Ended June 30 The following is a
list of the major items that impacted our second quarter and first
half results. The amounts are calculated on a net after tax basis
and attempt to estimate total business effects. Earnings Per Share
Earnings Per Share Three Six Months Months Diluted Earnings Per
Share - June 30, 2005 $0.35 $0.56 Change Volumes 0.03 0.06
Operating margin (0.01) 0.04 Foreign currency translation 0.02 0.04
Financing costs 0.02 0.04 Minority interest - - Effective tax rate
(0.01) (0.04) Shares outstanding - 0.01 Net Change 0.05 0.15
Diluted Earnings Per Share - June 30, 2006 $0.40 $0.71 III. Capital
expenditures Capital expenditures, net of proceeds on disposals,
for the quarters ended June 30, 2006 and 2005 were $39 million and
$34 million, respectively. IV. Non-GAAP Information The Company
uses certain key metrics to better monitor our progress towards
achieving our strategic business objectives. Among these metrics is
the Total Debt to Capitalization Percentage, which is not
calculated in accordance with Generally Accepted Accounting
Principles ("GAAP"). Management believes that this non-GAAP
information provides investors with a meaningful presentation of
useful information on a basis consistent with the way in which
management monitors and evaluates the Company's operating
performance. The information presented should not be considered in
isolation and should not be used as a substitute for our financial
results calculated under GAAP. In addition, these non-GAAP amounts
are susceptible to varying interpretations and calculations, and
the amounts presented below may not be comparable to similarly
titled measures of other companies. Our calculations of the Total
Debt to Capitalization Percentage at June 30, 2006 and December 31,
2005 are as follows: Total Debt to Capitalization Percentage June
30, December 31, (Dollars in millions) 2006 2005 Short-term debt
$71 $57 Long-term debt 454 471 Total debt (a) $525 $528 Deferred
income tax liabilities 130 128 Minority interest in subsidiaries 17
17 Redeemable common stock 34 29 Stockholders' equity 1,248 1,210
Total capital $ 1,429 $1,384 Total debt and capital (b) $ 1,954
$1,912 Debt to capitalization percentage (a/b) 26.9% 27.6%
DATASOURCE: Corn Products International, Inc. CONTACT: Investor,
Dave Prichard, +1-708-551-2592, or Media, Mark Lindley,
+1-708-551-2602, both of Corn Products International, Inc. Web
site: http://www.cornproducts.com/
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