Earnings rise in 3Q for corn ingredients

Meeting targets for the year, US ingredients company Corn Products International brushes off a tougher economic climate to post a solid set of third quarter results with earnings rising by 15 per cent. A strong performance in South America thanks to double-digit volume growth helped the overall figures for the company.

The producer of high fructose corn syrup for soft drinks said that hefty gains in sales and operating income in South America boosted the third quarter results, earning $20 million (€17m), or 55 cents a share in the third quarter, up 17 per cent from $17 million, or 48 cents, a year earlier.

Net sales for Corn Products International​ - a manufacturer of starch and glucose - rose 13 per cent to $541 million, up from $480 million on 2002 and operating income reached $45 million, up 11 per cent from $40 million for the previous year.

Massive gains in South America saw the company reporting a 37 per cent rise in sales for the third quarter to $129 million, up from $94 million for the year earlier, on the back of an 11 per cent surge in volume growth.

'The increase in sales was due to significant margin improvement in Argentina and Brazil as a consequence of better pricing and product mix, improved efficiencies on manufacturing costs, as well as strengthened currencies in both countries,'​ said the company this week.

This picture was not repeated in North America where volumes decreased by 4 per cent, knocked by figures from Canada that were 'negatively affected by the major power grid outage and its aftermath,' said the company. Despite this, sales for the region rose from $322 million in 2002 for third quarter ended 30 September 2002, to $344 million for the same period in 2003.

"For the full year 2003 we expect to deliver earnings in the upper range of our previously announced target of 8 per cent to 12 per cent above last year's $1.77 per diluted share,"​ said Sam Scott, chairman, president and chief executive officer of Corn Products International.

Following fellow HFCS producer Archer Daniels Midland (ADM), Corn Products said this week that it is submitting an arbitration claim for 'about $325 million in compensation for past and potential lost profits and other damages' in relation to Mexico's imposition of its 20 per cent 'discriminatory tax' on soft drinks containing high fructose corn syrup.

ADM said last week that it will sue the Mexican government for $100 million in compensation to recover damages 'incurred as a result of the soft drink tax'.