Corn Products International, Inc. Reports Third Quarter 2004
Earnings Company Reports EPS Growth of 16 Percent for the Quarter
Over Third Quarter 2003; Updates Guidance Range to 23% to 26%
Improvement Over Full Year 2003 WESTCHESTER, Ill., Oct. 19
/PRNewswire-FirstCall/ -- Corn Products International, Inc.
(NYSE:CPO) today announced significantly improved sales and
earnings for the third quarter and first nine months of 2004. For
the quarter ended September 30, 2004, the Company reported diluted
earnings per share of $0.64, an increase of 16 percent over diluted
earnings per share of $0.55 in the third quarter of 2003. The
Company's results have improved in each of the three quarters of
2004 over the prior year periods. Results for the third quarter
2004 as compared to the third quarter 2003 were as follows: -- Net
sales reached $587 million, up from $541 million -- Operating
income was $46 million, up from $45 million -- Net income was $24
million, up from $20 million "I am pleased to report that our
Company's results continued to improve during the third quarter and
are in line with our 2004 targets," said Sam Scott, chairman,
president and chief executive officer of Corn Products
International. "Our forecast of accelerated earnings growth during
the first half of 2004, followed by a good but less robust second
half, is proving to be correct, as projected higher raw material
and energy costs affected results in the third quarter." BUSINESS
BREAKDOWN BY REGION On a regional basis, results for the third
quarter compared to the same period the prior year were as follows:
In North America: -- Net sales were $371 million, up from $344
million -- Volume increased 4 percent -- Operating income was $21
million, up from $17 million Higher volumes in the North American
region, favorable pricing and a stronger exchange rate on the
Canadian dollar helped to offset expected higher raw material and
energy costs experienced during the quarter. Operating income grew
by 25 percent, and operating margins were 5.6 percent, up from 4.9
percent in the same quarter of 2003. "We continue to focus on
improving returns in our North American region," Scott said. "While
we are pleased with the improvement that we have achieved to date,
we know that we have more work to do." In South America: -- Net
sales were $139 million, up from $129 million -- Volume improved 4
percent -- Operating income was $24 million, up from $22 million
Strong volumes throughout most of the region, as well as favorable
pricing and product mix, combined to offset higher corn and energy
costs and weaker results in our Andean business. Operating income
rose 11 percent from the same period in 2003. In Asia/Africa: --
Net sales were $77 million, up from $68 million -- Volume increased
2 percent -- Operating income was $8 million, down from $13 million
Favorable volume, pricing and exchange rates contributed to the 14
percent increase in net sales. Operating income was down primarily
due to high corn and freight costs in Korea, which hit their peak
during the third quarter. Fourth-quarter costs should be more in
line with historic norms, as the most expensive corn purchased
during the year has been mostly consumed. During the quarter, the
Company's second plant in Pakistan started up. The Company also
received its business license for its new joint venture in China,
which was announced during the second quarter. NINE MONTHS 2004
RESULTS For the nine months ended September 30, 2004, the Company
reported diluted earnings per share of $2.13, up 48 percent from
diluted earnings per share of $1.44 in the first nine months of
2003. Results for the first nine months of 2004 compared to the
prior year period were as follows: -- Net sales were $1,710
million, up from $1,560 million -- Operating income was $154
million, up from $123 million -- Net income was $79 million, up
from $52 million Cash provided by operations for the first nine
months of 2004 totaled $96 million, compared to $132 million for
the same period in 2003. The decline in cash flow for the
nine-month period ended September 30, 2004, is due primarily to the
US/Canadian margin account activity. Total debt at September 30,
2004, was $578 million compared to $609 million at September 30,
2003. Cash and temporary investments at September 30, 2004, were
$138 million, up $77 million from September 30, 2003. The effective
income tax rate was 33 percent for the nine-month period ended
September 30, 2004, compared to 36 percent for the same period in
2003. This change in the tax rate contributed $0.10 diluted EPS to
the nine-month period ended September 30, 2004. OUTLOOK "We are
updating our guidance of annual earnings improvement from a range
of 21 percent to 26 percent to a range of 23 percent to 26 percent
over 2003's diluted EPS of $2.11," said Scott. "As previously
stated, approximately 5 percent of that increase is attributable to
the impact of the lower effective tax rate. "Going forward, we
continue to be optimistic that a solution will be found to the
Mexican tax on high fructose corn syrup (HFCS). Late in the third
quarter, our shipments of HFCS to beverage accounts increased. If
this increase continues, we expect our performance for the year
could be somewhat stronger than forecast in our updated guidance.
"Finally, we maintain confidence in our ability to deliver
low-double- digit earnings-per-share growth over time as we
implement the multiple pathway strategy that we unveiled earlier
this year." ABOUT CORN PRODUCTS INTERNATIONAL, INC. 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 2003, the Company
recorded net sales of $2.1 billion with operations in 19 countries
at 37 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 press release
contains or may contain forward-looking statements concerning the
Company's financial position, business and future earnings and
prospects, in addition to other statements using words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend" and
other similar expressions. 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 sell our products, including fluctuations in the
value of local currencies, energy costs and availability and
changes in regulatory controls regarding quotas, tariffs, taxes,
income tax rates, biotechnology issues; changing consumption
preferences and trends; increased competitive and/or customer
pressure in the corn refining industry; the outbreak or
continuation of hostilities; stock market fluctuation and
volatility; and the resolution of the current 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 Change Nine Months Change Ended % Ended % September
30, September 30, 2004 2003 2004 2003 Net sales before shipping and
handling costs $633.7 $582.7 9 % $1,841.6 $1,684.1 9 % Less:
shipping and handling costs 46.3 42.0 10 % 131.8 124.6 6 % Net
sales 587.4 540.7 9 % 1,709.8 1,559.5 10 % Cost of sales 504.0
457.0 10 % 1,440.3 1,328.0 8 % Gross profit 83.4 83.7 - % 269.5
231.5 16 % Operating expenses 37.2 37.6 -1 % 117.9 108.2 9 % Other
income (expense), net 0.2 (1.2) 117 % 2.4 (0.5) 580 % Operating
income 46.4 44.9 3 % 154.0 122.8 25 % Financing costs 8.3 10.1 -18
% 25.8 29.2 -12 % Income before taxes 38.1 34.8 9 % 128.2 93.6 37 %
Provision for income taxes 12.6 12.5 42.3 33.7 25.5 22.3 14 % 85.9
59.9 43 % Minority interest in earnings 1.5 2.3 -35 % 6.7 8.0 -16 %
Net income $24.0 $20.0 20 % $79.2 $51.9 53 % Weighted average
common shares outstanding: Basic 36.9 36.0 36.5 35.9 Diluted 37.5
36.3 37.1 36.1 Earnings per common share: Basic $0.65 $0.55 18 %
$2.17 $1.44 51 % Diluted $0.64 $0.55 16 % $2.13 $1.44 48 % CORN
PRODUCTS INTERNATIONAL, INC. Condensed Consolidated Balance Sheets
(In millions, except share amounts) September December 30, 31, 2004
2003 (Unaudited) Assets Current assets Cash and cash equivalents
$138 $70 Accounts receivable - net 315 252 Inventories 230 215
Prepaid expenses 12 10 Total current assets 695 547 Property, plant
and equipment - net 1,169 1,187 Goodwill and other intangible
assets 327 319 Deferred tax assets 58 61 Investments 29 29 Other
assets 59 67 Total assets $2,337 $2,210 Liabilities and Equity
Current liabilities Short-term borrowings and current portion of
long-term debt $99 $98 Accounts payable and accrued liabilities 351
296 Total current liabilities 450 394 Non-current liabilities 106
112 Long-term debt 479 452 Deferred income taxes 178 196 Minority
interest in subsidiaries 79 78 Redeemable equity - Redeemable
common stock (613,500 and 1,913,500 shares issued at September 30,
2004 and December 31, 2003, respectively) stated at redemption
price 28 67 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 - 37,046,387 and
35,746,387 issued at September 30, 2004 and December 31, 2003,
respectively 1 1 Additional paid in capital 1,045 1,006 Less:
Treasury stock (common stock; 737,976 and 1,494,101 shares at
September 30, 2004 and December 31, 2003, respectively) at cost
(14) (35) Deferred compensation - restricted stock (2) (3)
Accumulated other comprehensive loss (364) (343) Retained earnings
351 285 Total stockholders' equity 1,017 911 Total liabilities and
equity $2,337 $2,210 CORN PRODUCTS INTERNATIONAL, INC. Condensed
Consolidated Statements of Cash Flows (Unaudited) For The Nine
Months Ended September 30, (In millions) 2004 2003 Cash provided by
(used for) operating activities: Net income $79 $52 Adjustments to
reconcile net income to net cash provided by (used for) operating
activities: Depreciation 76 76 Increase in trade working capital
(62) (3) Other 3 7 Cash provided by operating activities 96 132
Cash provided by (used for) investing activities: Capital
expenditures, net of proceeds on disposal (51) (46) Payments for
acquisitions, net (2) (48) Other 1 - Cash used for investing
activities (52) (94) Cash provided by (used for) financing
activities: Proceeds from borrowings, net 23 - Issuance of common
stock 20 2 Dividends paid (19) (16) Cash provided by (used for)
financing activities 24 (14) Effect of foreign exchange rate
changes on cash - 1 Increase in cash and cash equivalents 68 25
Cash and cash equivalents, beginning of period 70 36 Cash and cash
equivalents, end of period $138 $61 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 Change Nine Months
Change Ended Ended September 30, September 30, 2004 2003 % 2004
2003 % Net sales North America $371.0 $343.5 8 % $1,072.3 $996.8 8
% South America 139.1 129.1 8 % 406.5 353.8 15 % Asia/Africa 77.3
68.1 14 % 231.0 208.9 11 % Total $587.4 $540.7 9 % $1,709.8
$1,559.5 10 % Operating income North America $20.9 $16.7 25 % $68.8
$43.0 60 % South America 23.9 21.6 11 % 71.5 58.3 23 % Asia/Africa
8.5 13.1 -35 % 38.2 41.2 -7 % Corporate (6.9) (6.5) 6 % (24.5)
(19.7) 24 % Total $46.4 $44.9 3 % $154.0 $122.8 25 % II. Estimated
Sources of Diluted Earnings Per Share for the Three and Nine Months
Ended September 30 The following is a list of the major items that
impacted our third quarter and year-to-date results. The amounts
are calculated on a net after-tax basis and attempt to estimate
total business effects. Earnings Per Earnings Per Share Share Three
Nine Months Months Earnings Per Share September 30, 2003 $0.55
$1.44 Change Volumes 0.07 0.21 Operating margin (0.04) 0.23 Foreign
currency translation - 0.11 Financing costs 0.03 0.06 Minority
interest 0.02 0.04 Effective tax rate 0.03 0.10 Shares outstanding
(0.02) (0.06) Net Change 0.09 0.69 Earnings Per Share September 30,
2004 $0.64 $2.13 III. Capital expenditures Capital expenditures for
the quarters ended September 30, 2004 and 2003, were $20 million
and $19 million, 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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