Westchester, Ill.- April 22, 2008 -Corn Products International, Inc., a leading global provider of agriculturally derived ingredients for diversified markets, today reported record quarterly net income of $64 million, or $0.85 per diluted share, for the first quarter ended March 31, 2008, a 29 percent increase compared with net income of $50 million, or $0.66 per diluted share, last year.
For the ninth consecutive quarter, net sales reached a record level. Net sales of $931 million in the first quarter of 2008 improved 22 percent versus $762 million in the prior-year period. The net sales growth was predominantly the result of strong pricing actions, product mix improvement, and favorable currency translation. Volumes fell slightly due to lower customer demand.
Gross profit of $173 million in the first quarter of 2008 improved 18 percent compared with $146 million a year ago. Strong pricing actions and improved product mix in North and South America were the primary contributors to the higher gross profit dollar level. The gross margin of 18.6 percent compared with 19.2 percent last year.
Operating expenses as a percentage of sales in the first quarter of 2008 was 7.3 percent, a reduction versus 7.6 percent a year ago.
Operating income of $107 million in the first quarter of 2008 grew 22 percent versus $88 million last year. The operating margin of 11.5 percent was essentially unchanged from 2007.
2008 first-quarter net financing costs declined $2.6 million from last year, of which $1.2 million was attributable to foreign currency gains. The effective tax rate of 33.5 percent compared with 34.0 percent last year.
Regional Business Segment Performance
Regional results for the quarter ended March 31, 2008 were as follows:
North America
Net sales of $537 million increased 15 percent versus $468 million in 2007 due predominantly to improved price/product mix, along with positive foreign currency translation. Volumes were unfavorable across the region due primarily to poor weather conditions and the economic softness, both of which impacted customer takeaway. All three countries contributed to the net sales growth. Operating income of $75 million increased 23 percent from $61 million last year.
South America
Net sales of $272 million rose 36 percent compared with $200 million a year ago as a result of favorable price/product mix and foreign currency translation, slightly offset by lower volumes from reduced takeaway in the Brazilian brewing segment. Operating income of $32 million improved 29 percent from $25 million in the prior year. Brazil and the Southern Cone delivered strong performances. The Andean region's performance was negatively impacted by expenses related to the start-up of an infant food program which is expected to become a more positive contributor later in 2008.
Asia/Africa
Net sales of $122 million grew 30 percent versus $94 million last year due to strong pricing actions. Operating income of $13 million fell 10 percent from the prior year. Operating income improvements in Pakistan, Thailand, China and Kenya were more than offset by a decline in South Korea's operating income. Excluding South Korea, the division's operating income increased 40 percent.
Balance Sheet and Cash Flow
The Company's balance sheet remained strong as of March 31, 2008. Net debt (total debt less cash) of $414 million compared with $474 million at December 31, 2007 and $471 million at March 31, 2007. Cash provided by operations for the first quarter of 2008 was $116 million compared with $58 million in the prior year. The change was attributable to an increase in net income of $14 million and a positive swing in working capital of $40 million.
2008 Outlook
"We have raised our 2008 EPS guidance on the strength of our first quarter performance and the greater visibility we have on the rest of the year," said Sam Scott, chairman, president and chief executive officer of Corn Products International. "We now expect a 12 to 22 percent increase in diluted EPS in 2008, or $2.90 to $3.15, versus $2.59 in 2007, which included a 5-cent gain from our Company's holdings in CME Group Inc. Our prior 2008 EPS guidance was $2.65 to $2.85. We also now believe that net sales in 2008 should reach $4 billion.
"Our North and South American businesses should continue to drive our improved performance for the balance of 2008," said Scott. "We still expect lower results in Asia/Africa due to the cost and volume challenges in South Korea we have previously discussed." He added that results in the first half of 2008 are expected to be stronger than those in the second half due to anticipated higher raw material costs.
"We are pleased to begin 2008 with this outstanding performance, and we are excited about our outlook for reporting another year of record results," said Scott. "The business model for our Company is working in this difficult environment, and we remain focused on successfully navigating a changing and challenging global marketplace with steady execution and discipline."
Corn Products International, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In millions, except per share amounts)
Three Months
Ended March
31, Change %
--------------- --------
2008 2007
---------------
Net sales before shipping and handling costs $991.0 $816.7 21%
Less: shipping and handling costs 60.1 54.8 10%
---------------
Net sales $930.9 $761.9 22%
Cost of sales 757.7 615.7 23%
---------------
Gross profit $173.2 $146.2 18%
Operating expenses 67.5 57.6 17%
Other income (expense), net 1.0 (0.8) 225%
---------------
Operating income $106.7 $87.8 22%
Financing costs, net 7.3 9.9 -26%
---------------
Income before income taxes $99.4 $77.9 28%
Provision for income taxes 33.3 26.5
---------------
$66.1 $51.4 29%
Minority interest in earnings 1.8 1.4 29%
---------------
Net income $64.3 $50.0 29%
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Weighted average common shares outstanding:
Basic 74.1 74.5
Diluted 75.6 76.2
Earnings per common share:
Basic $0.87 $0.67 30%
Diluted $0.85 $0.66 29%
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In millions, except share and per share March 31, December 31,
amounts) 2008 2007
----------- -------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $190 $175
Accounts receivable - net 576 460
Inventories 428 427
Prepaid expenses 19 14
Deferred income tax assets 12 13
----------------------------------------------------------------------
Total current assets $1,225 $1,089
----------------------------------------------------------------------
Property, plant and equipment - net 1,531 1,500
Goodwill and other intangible assets 412 426
Deferred income tax assets 1 1
Investments 11 13
Other assets 74 74
----------------------------------------------------------------------
Total assets $3,254 $3,103
----------------------------------------------------------------------
Liabilities and equity
Current liabilities
Short-term borrowings and current portion
of long-term debt 91 130
Deferred income taxes 28 28
Accounts payable and accrued liabilities 531 516
----------------------------------------------------------------------
Total current liabilities $650 $674
----------------------------------------------------------------------
Non-current liabilities 133 123
Long-term debt 513 519
Deferred income taxes 172 133
Minority interest in subsidiaries 21 21
Redeemable common stock (500,000 shares
issued and
outstanding at March 31, 2008 and
December 31, 2007)
stated at redemption value 19 19
Share-based payments subject to
redemption 7 9
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 issued
at March 31, 2008
and December 31, 2007 1 1
Additional paid in capital 1,083 1,082
Less: Treasury stock (common stock;
1,409,612 and 1,568,996
shares at March 31, 2008 and
December 31, 2007, respectively) at
cost (53) (57)
Accumulated other comprehensive loss (42) (115)
Retained earnings 750 694
----------------------------------------------------------------------
Total stockholders' equity $1,739 $1,605
----------------------------------------------------------------------
Total liabilities and equity $3,254 $3,103
----------------------------------------------------------------------
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Three
Months Ended
March 31,
( In millions ) 2008 2007
------ ------
Cash provided by operating activities:
Net income $64 $50
Adjustments to reconcile net income to
net cash provided by (used for) operating activities:
Depreciation 32 31
Decrease (increase) in working capital 8 (32)
Other 12 9
----------------------------------------------------------------------
Cash provided by operating activities 116 58
----------------------------------------------------------------------
Cash used for investing activities:
Capital expenditures, net of proceeds on disposals (48) (32)
Payments for acquisition (net of cash acquired of $7
in 2007) - (59)
----------------------------------------------------------------------
Cash used for investing activities (48) (91)
----------------------------------------------------------------------
Cash used for financing activities:
Payments on / proceeds from borrowings, net (45) 2
Issuances (repurchases) of common stock, net 1 (5)
Dividends paid (including to minority interest
shareholders) (10) (8)
----------------------------------------------------------------------
Cash used for financing activities (54) (11)
----------------------------------------------------------------------
Effect of foreign exchange rate changes on cash 1 -
----------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 15 (44)
Cash and cash equivalents, beginning of period 175 131
----------------------------------------------------------------------
Cash and cash equivalents, end of period $190 $87
----------------------------------------------------------------------
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
March 31, Change
2008 2007 %
--------- --------- ------
Net Sales
North America $536.9 $467.8 15%
South America 272.1 200.4 36%
Asia/Africa 121.9 93.7 30%
--------- --------- ------
Total $930.9 $761.9 22%
========= ========= ======
Operating Income
North America $75.3 $61.1 23%
South America 32.2 25.0 29%
Asia/Africa 12.9 14.3 -10%
Corporate (13.7) (12.6) 9%
--------- --------- ------
Total $106.7 $87.8 22%
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II. Capital expenditures
Capital expenditures, net of proceeds on disposals, for the quarters
ended March 31, 2008 and 2007, were $48 million and $32 million,
respectively. Capital expenditures for the full year 2008 are
estimated to be $200 million.
III. 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 March 31, 2008 and December 31, 2007 are
as follows:
Total Debt to Capitalization Percentage
March 31, December 31,
(Dollars in millions) 2008 2007
------------ ------------
Short-term debt $91 $130
Long-term debt 513 519
------------ ------------
Total debt (a) $604 $649
------------ ------------
Deferred income tax liabilities 172 133
Minority interest in subsidiaries 21 21
Redeemable common stock 19 19
Share-based payments subject to redemption 7 9
Stockholders' equity 1,739 1,605
------------ ------------
Total capital $1,958 $1,787
------------ ------------
------------ ------------
Total debt and capital (b) $2,562 $2,436
------------ ------------
------------ ------------
Debt to capitalization percentage (a/b) 23.6% 26.6%
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