Charges trip 3Q results at Corn Products International

By Dow Jones Newswires
Posted Oct. 28, 2010 at 10:15 a.m.

Corn Products International Inc.’s  third-quarter profit dropped 30 percent on acquisition costs, but the company reported strong volume growth across all regions and said earnings are soaring at its new specialty starches business.

The Westchester-based grain processor also raised its current-year earnings forecast to $2.75 to $2.85 a share from $2.55 to $2.75 a share, citing its strong performance.

The company’s performance was driven by South America, where sales rose 14 percent, and by a 30 percent increase in sales in its Asia-Africa segment, which includes South Korea and Pakistan.

Sales in North America, its largest segment by revenue, fell 3 percent because of an unfavorable correlation between the cost of corn and the price of the company’s products.

But sales of high fructose corn syrup, which have sagged in the U.S. amid a consumer backlash, remains strong in Mexico, the company said. A small sugar crop and higher sugar prices in Mexico will encourage food companies to use  corn sweetener instead, officials said.

“I think it should continue to be a very positive environment for shipments of corn sweeteners to Mexico,” Chief Executive Ilene Gordon said in a post-earnings conference call.

The company reported a profit of $36.9 million, or 48 cents a share, down from $52.8 million, or 70 cents, a year earlier. The latest quarter had 33 cents of acquisition and other charges.

Excluding those charges, the company reported earnings of 81 cents a share. Revenue rose 5 percnet to $1.02 billion thanks to higher volume and a weaker dollar.

Analysts expected earnings of 80 cents on revenue of $1.03 billion, according to Thomson Reuters.

The company also announced better-than-expected earnings for the newly acquired National Starch. Gordon said the company, purchased for $1.3 billion from Netherlands-based Akzo Nobel N.V., has been an “outstanding acquisition,” as the company is seeing soaring volumes in a record 2010.

The company raised its 2010 earnings estimate for National Starch to $205 million to $215 million, up sharply from the estimate of $135 million to $150 million when the deal was announced in June. The deal was completed Oct. 1.

National Starch produces specialty ingredients used in products including soups, mayonnaise and yogurt. Its increased earnings are being driven by better-than-expected volumes around the world, Gordon said.

“They are having a phenomenal year,” she said.

Corn Products, which supplies sweeteners and starches, has been looking to diversify and start selling ingredients with higher profit margins.

Corn Products was recently trading up 1 percent, to $41.52 a share. It is up 42 percent on the year.

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