- Raises 2007 Full-Year EPS Outlook to $2.35-$2.55 from $2.10-$2.30
WESTCHESTER, Ill., July 24 /PRNewswire-FirstCall/ -- Corn Products
International, Inc. (NYSE:CPO), a leading global provider of
agriculturally derived ingredients for diversified markets, today
reported record quarterly diluted earnings per share of $0.66 for
the second quarter ended June 30, 2007, a 65 percent increase
compared with diluted earnings per share of $0.40 a year ago. Net
income of $51 million in the second quarter of 2007 improved 68
percent versus $30 million last year. Net sales of $857 million in
the second quarter of 2007, a record quarterly level, improved 33
percent versus $645 million in the prior-year period. The higher
net sales were primarily the result of improved price/product mix,
along with favorable volumes and foreign currency translations. The
acquisitions of SPI Polyols, Getec and DEMSA contributed
approximately $29 million of net sales in the second quarter. Gross
profit of $156 million in the second quarter of 2007 increased 49
percent versus $105 million a year ago. Gross margins expanded to
18.1 percent compared with 16.2 percent last year. The improvement
was driven by significantly higher North and South American
results, predominantly from higher pricing. Corn costs increased
significantly, while energy costs were nominally higher. Last
year's second quarter was negatively impacted by two factors - the
first step in the boiler tie-in at the Argo plant and a weak
performance for Brazil. Operating income of $91 million in the
second quarter of 2007 grew 59 percent versus $57 million last
year. Operating margins improved to 10.6 percent from 8.9 percent
in 2006. Higher net financing costs in the second quarter of 2007
of approximately $13 million were due in part to lower capitalized
interest. The second- quarter effective tax rate of 32.8 percent
compared favorably with 37.0 percent in 2006, reflecting a change
in the earnings mix. Overall, the Company's diluted earnings per
share increase of 26 cents in the second quarter of 2007 was
attributable to 24 cents per share from operating margins, 4 cents
per share from the change in the annual effective tax rate, 2 cents
per share from volumes and 2 cents per share from foreign currency
translation. Higher financing costs reduced earnings per share by 4
cents, while increased shares outstanding and a higher minority
interest each negatively impacted earnings per share by 1 cent.
Regional Business Segment Performance Regional results for the
quarter ended June 30, 2007 were as follows: North America Net
sales of $534 million increased 34 percent versus $398 million in
2006 primarily due to improved price/product mix, as well as
slightly favorable volumes and foreign currency translation.
Operating income of $68 million grew 85 percent from $37 million
last year. All three country businesses contributed to the strong
performance. South America Net sales of $218 million increased 40
percent compared with $156 million a year ago primarily as a result
of improved price/product mix, along with favorable volumes and
foreign currency translation. Operating income of $26 million grew
56 percent from $17 million in the prior year due to a significant
improvement in Brazil. Asia/Africa Net sales of $105 million
increased 15 percent versus $91 million last year primarily from
improved price/product mix, coupled with positive volumes and
foreign currency translation. Operating income of $12 million
declined 22 percent versus $15 million last year as lower results
in South Korea and Thailand more than offset growth in Pakistan.
2007 First Half Results For the first six months of 2007, the
Company reported net income of $101 million, or $1.32 per diluted
share, compared with net income of $54 million, or $0.71 per
diluted share, last year. Both gross and operating margins of 18.6
percent and 11 percent, respectively, widened by approximately 300
basis points compared with last year's first half. Net sales of
$1.62 billion grew 29 percent versus $1.26 billion in the prior
year. Improved price/product mix drove the improvement. The
effective tax rate for the first half of 2007 was 33.4 percent
versus 37.8 percent in 2006. Balance Sheet and Cash Flow The
Company continued to maintain a strong balance sheet and excellent
liquidity as of June 30, 2007. Total debt was $893 million, which
included $300 million of new debt issued in April 2007, and cash
and cash equivalents were $396 million. On July 15, 2007, the
Company repaid $255 million of short-term debt. Cash provided by
operations for the first half of 2007 was $67 million. Net income
and depreciation contributed a combined $163 million. The increase
in working capital of $101 million included investments of $78
million in receivables and $26 million in inventories. 2007 Outlook
Given the strength of its second quarter performance, Corn Products
International has raised its diluted EPS expectations for full-year
2007 to $2.35 to $2.55, or a 44 to 56 percent increase from a
record $1.63 in 2006. "Our North American region should remain the
major profit driver for the rest of 2007, along with a solid
improvement from South America," said Sam Scott, president,
chairman and chief executive officer of Corn Products
International. "We anticipate flat profitability in Asia/Africa due
to a weaker performance in South Korea which is impacting operating
income growth in the region. "We expect a healthy second half of
2007," Scott added. "Our full-year EPS guidance calls for the last
half of 2007 to be in the range of $1.03 to $1.23 versus 92 cents a
year ago, which would be a double-digit increase of 12 to 34
percent." He added that the Company expects to exceed its return on
capital employed (ROCE) target of 8.5 percent and its annual net
sales goal of $3 billion in 2007. The Company has increased its
2007 capital spending plan to $200 million from $145 million in
view of new and attractive growth projects. These include polyol
investments in the U.S., Mexico and Brazil to support recent
acquisitions, new modified starch capacity in Mexico, and a new
plant investment in Pakistan. "Our original 2007 capital spending
plan, as we noted before, includes product channel expansions in
such countries as Argentina, Colombia, Mexico, Pakistan and
Thailand," Scott noted. "Our record capital expenditures program
this year supports several of our Pathway Strategy steps to drive
organic growth in our base business and broaden our value-added
product portfolio. "Overall, we are very pleased about prospects to
deliver another year of exceptional earnings in 2007," Scott said,
"and we are focused on the successful execution of our Pathway
Strategy to generate future growth." 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 913.981.4911. A replay of the audio call
will be available through Friday, August 3 by calling 719.457.0820
and using passcode 1281465. About the Company 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 2006, Corn Products International reported record
net sales and diluted earnings per share of $2.62 billion and
$1.63, respectively, with operations in 15 countries at 35 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 therefor
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 markets for corn and other commodities,
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; our ability to effectively
integrate acquired businesses; 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; and stock
market fluctuation and volatility. 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, 2006 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 Change Six Months Ended
Change June 30, % June 30, % 2007 2006 2007 2006 Net sales before
shipping and handling costs $917.0 $701.0 31% $1,733.6 $1,366.8 27%
Less: shipping and handling costs 60.0 56.1 7% 114.8 107.1 7% Net
sales $857.0 $644.9 33% $1,618.8 $1,259.7 29% Cost of sales 701.5
540.4 30% 1,317.2 1,062.4 24% Gross profit $155.5 $104.5 49% $301.6
$197.3 53% Operating expenses 64.9 49.4 31% 122.5 97.2 26% Other
income (expense), net 0.0 2.0 (100%) (0.8) 3.2 (125%) Operating
income $90.6 $57.1 59% $178.3 $103.3 73% Financing costs, net 12.9
7.6 70% 22.7 14.2 60% Income before income taxes $77.7 $49.5 57%
$155.6 $89.1 75% Provision for income taxes 25.5 18.3 52.0 33.7
$52.2 $31.2 67% $103.6 $55.4 87% Minority interest in earnings 1.6
1.1 45% 3.0 1.9 58% Net income $50.6 $30.1 68% $100.6 $53.5 88%
Weighted average common shares outstanding: Basic 74.8 73.9 74.6
74.0 Diluted 76.6 75.3 76.4 75.4 Earnings per common share: Basic
$0.68 $0.41 66% $1.35 $0.72 88% Diluted $0.66 $0.40 65% $1.32 $0.71
86% CORN PRODUCTS INTERNATIONAL, INC. Condensed Consolidated
Balance Sheets (In millions, except share and per share amounts)
June 30, December 31, 2007 2006 (Unaudited) Assets Current assets
Cash and cash equivalents $396 $131 Accounts receivable -- net 414
357 Inventories 365 321 Prepaid expenses 16 12 Deferred income
taxes 16 16 Total current assets $1,207 $837 Property, plant and
equipment -- net 1,428 1,356 Goodwill and other intangible assets
428 381 Deferred income taxes -- 1 Investments 6 33 Other assets 83
54 Total assets $3,152 $2,662 Liabilities and equity Current
liabilities Short-term borrowings and current portion of long-term
debt 353* 74 Deferred income taxes 14 14 Accounts payable and
accrued liabilities 457 429 Total current liabilities $824* $517
Non-current liabilities 159 147 Long-term debt 540 480 Deferred
income taxes 112 121 Minority interest in subsidiaries 20 19
Redeemable common stock (500,000 and 1,227,000 shares issued and
outstanding at June 30, 2007 and December 31, 2006, respectively)
stated at redemption value 22 44 Share-based payments subject to
redemption 8 4 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 -- 74,819,774 and
74,092,774 issued at June 30, 2007 and December 31, 2006,
respectively 1 1 Additional paid in capital 1,073 1,051 Less:
Treasury stock (common stock; 494,715 and 1,017,207 shares at June
30, 2007 and December 31, 2006, respectively) at cost (14) (27)
Accumulated other comprehensive loss (207) (223) Retained earnings
614 528 Total stockholders' equity $1,467 $1,330 Total liabilities
and equity $3,152 $2,662 * Includes $255 million of Senior Notes
that were repaid on the maturity date of July 15, 2007 with net
proceeds from the $300 million of long-term Senior Notes sold April
10, 2007 CORN PRODUCTS INTERNATIONAL, INC. Condensed Consolidated
Statements of Cash Flows (Unaudited) For the Six Months Ended June
30, ( In millions ) 2007 2006 Cash provided by operating
activities: Net income $101 $54 Adjustments to reconcile net income
to net cash provided by (used for) operating activities:
Depreciation 62 55 Increase in trade working capital (101) (66)
Other 5 9 Cash provided by operating activities 67 52 Cash used for
investing activities: Capital expenditures, net of proceeds on
disposal (69) (76) Payments for acquisition (net of cash acquired
of $7) (59) -- Other 1 -- Cash used for investing activities (127)
(76) Cash used for financing activities: Proceeds from (payments
on) borrowings, net 331 (7) Issuances (repurchases) of common
stock, net 5 (18) Dividends paid (16) (13) Excess tax benefit on
share-based compensation 3 1 Other 1 -- Cash provided by (used for)
financing activities 324 (37) Effect of foreign exchange rate
changes on cash 1 2 Increase (decrease) in cash and cash
equivalents 265 (59) Cash and cash equivalents, beginning of period
131 116 Cash and cash equivalents, end of period $396 $57 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 2007 2006 % 2007
2006 % Net Sales North America $533.7 $397.9 34% $1,001.4 $774.1
29% South America 218.5 155.6 40% 418.9 306.6 37% Asia/Africa 104.8
91.4 15% 198.5 179.0 11% Total $857.0 $644.9 33% $1,618.8 $1,259.7
29% Operating Income North America $68.4 $36.9 85% $129.5 $61.3
111% South America 25.9 16.6 56% 50.9 36.3 40% Asia/Africa 11.7
15.0 (22%) 26.0 28.0 (7%) Corporate (15.4) (11.4) 35% (28.1) (22.3)
26% Total $90.6 $57.1 59% $178.3 $103.3 73% II. Estimated Sources
of Diluted Earnings Per Share for the Three and Six Months ended
June 30, 2007 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
Months Six Months Diluted Earnings Per Share - June 30, 2006 $0.40
$0.71 Change Volumes 0.02 0.05 Operating margin 0.24 0.54 Foreign
currency translation 0.02 0.03 Financing costs (0.04) (0.07)
Minority interest (0.01) (0.01) Effective tax rate 0.04 0.09 Shares
outstanding (0.01) (0.02) Net change 0.26 0.61 Diluted Earnings Per
Share - June 30, 2007 $0.66 $1.32 III. Capital expenditures Capital
expenditures, net of proceeds on disposals, for the quarters ended
June 30, 2007 and 2006, were $37 million and $39 million,
respectively. Capital expenditures for the full year 2007 are
estimated to be $200 million. 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, 2007 and December 31,
2006 are as follows: Total Debt to Capitalization Percentage June
30, December 31, (Dollars in millions) 2007 2006 Short-term debt
$353* $74 Long-term debt 540 480 Total debt (a) $893 $554 Less:
Repayment of $255 million Senior Notes on July 15, 2007 (255) Total
debt - proforma (b) $638** Deferred income tax liabilities 112 121
Minority interest in subsidiaries 20 19 Redeemable common stock 22
44 Share-based payments subject to redemption 8 4 Stockholders'
equity 1,467 1,330 Total capital $1,629 $1,518 Total debt and
capital (c) $2,522 $2,072 Debt to capitalization percentage (a/c)
35.4% 26.7% Total debt and capital - proforma (d) $2,267 Debt to
capitalization percentage - proforma (b/d) 28.1%** * Includes $255
million of Senior Notes that were repaid on the maturity date of
July 15, 2007 with net proceeds from the $300 million of long-term
Senior Notes sold April 10, 2007. ** Proforma total debt and
proforma debt to capitalization percentage at June 30, 2007
reflects the repayment of $255 million of Senior Notes on the
maturity date of July 15, 2007. 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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