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.
SOURCE Corn Products International, Inc.
04/19/2005
/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 /
(CPO)
