Corn Products International, Inc. Reports Third Quarter 2002 Results
The third quarter 2001 results included net non-recurring aftertax earnings of $3.5 million ($0.10 per diluted share) related to a valued-added- tax (VAT) refund, net of one-time charges.
Excluding last year's net non-recurring earnings, the results for the third quarter of 2002 compared as follows to the same period in 2001 --
-- Net sales were $480 million, up from $475 million
-- Gross profit was $70 million versus $73 million
-- Operating income was $40 million versus $42 million
-- Net income was $17 million, up from $16 million
Excluding last year's net non-recurring earnings, third quarter 2002 net income
exceeded the year-ago results, reflecting significantly lower financing costs,
improved Asia/Africa operating results and the discontinuation of goodwill
amortization. Goodwill amortization was $2-million aftertax ($0.05 per diluted
share) in the third quarter of 2001. The effective tax rate is 36 percent versus
35 percent last year.
"Our business performed well in the third quarter, despite weaker results in South America and reduced high fructose corn syrup (HFCS) sales in Mexico, caused by the resumption of the value-added tax (VAT) on soft drinks sweetened with HFCS," said Sam Scott, chairman, president and chief executive officer. "We are particularly pleased with the progress we are making toward improved performance in the United States and Argentina, and the continued earnings growth in Asia. Additionally, we have generated strong cash flow worldwide that has enabled us to further reduce our debt and lower our interest costs."
Third Quarter Business Breakdown By RegionResults for the third quarter of 2002 compared as follows to the same period in 2001 --
In North America
-- Net sales were $322 million, up from $311 million
-- Operating income was $18 million, consistent with last year
-- Volume was up 4 percent from last year
Despite significantly lower HFCS sales in Mexico, sales volume in the region
grew 4 percent. Operating income was relatively flat as improved 2002 annual US
pricing, cost reductions, volume and mix substantially offset a decline in
Mexico.
In South America
-- Net sales were $94 million versus $106 million
-- Operating income was $14 million, down 17 percent
-- Volume was flat from last year
The Company achieved better operating income in the Southern Cone of South
America, principally Argentina, through strong export business and lower costs
including goodwill amortization. Additionally, price improvements in the South
American region have been significant, although they continue to lag currency
devaluation. The decline in operating income mainly reflects lower results in
Brazil, attributable to the recent difficult economic conditions in that
country.
In Asia/Africa
-- Net sales were $64 million, up from $58 million
-- Operating income was $14 million, up 27 percent
-- Volume grew 2 percent from last year
As the Company's Asian strategy continues to deliver growth, the region reported
another strong quarter. Net sales and operating income were boosted by higher
volumes and favorable exchange rates.
NINE MONTH RESULTS FOR 2002
For the nine months ended September 30, 2002, diluted earnings were $1.31 per share, which included net non-recurring earnings of $0.08 per diluted share, consisting primarily of a one-time gain from the sale of assets, partially offset by a restructuring charge. This compared with the results for the same period in 2001 of $1.34 per diluted share, which included net non-recurring earnings of $0.10 per diluted share. The year-ago period also included goodwill amortization of $0.16 per diluted share.
Excluding the net non-recurring earnings, the results for the first nine months of 2002 compared as follows to same period in 2001 --
-- Net sales were $1.40 billion versus $1.41 billion
-- Gross profit was $200 million versus $221 million
-- Operating income was $107 million versus $123 million
-- Net income was $44 million consistent with last year
Cash provided by operations for the first nine months of 2002 doubled to $164
million from the year ago period, driven mainly by improved working capital
management. The improved cash flow was used primarily to pay down debt. Reduced
debt levels, coupled with lower interest rates, contributed to a 43-percent
decrease in financing costs from a year ago.
OUTLOOK
The Company stated that while the US/Mexican sweetener issue has not yet been resolved, negotiations continue and the Company is encouraged with the progress to date. It also reconfirmed that its outlook for 2002 earnings per share is expected to be at or near 2001 results.
The Company also noted that it anticipates its joint marketing company -- CornProductsMCP Sweeteners LLC, will be terminated effective December 31, 2002, and has developed a comprehensive plan for its dissolution, which includes a smooth transition for its customers. The net financial impact of this action, although indeterminate at this point, is anticipated to be positive, and is not included in the above outlook.
A real-time web cast, available on the Corn Products International web site, http://www.cornproducts.com, will follow this release today at 7:30 a.m. CDT, during which the Company's senior management will present an overview of results.
About Corn Products International, Inc.
The Company 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 No. 1 worldwide producer of dextrose and a leading regional producer of starch, high fructose corn syrup and glucose. In 2001, the Company recorded sales of $1.9 billion with operations in 19 countries at 42 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 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 factors such as the following: 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 and biotechnology issues; and increased competitive and/or customer pressure in the corn refining industry. 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 Nine Months Ended Change
September 30, % September 30, %
2002 2001 2002 2001
Net sales before
shipping and
handling costs $507.4 $505.7 0% $1,480.0 $1,525.8 -3%
Less: Shipping and
handling costs 27.3 31.2 -13% 81.8 114.5 -29%
Net sales 480.1 474.5 1% 1,398.2 1,411.3 -1%
Cost of sales 410.1 390.4 5% 1,198.0 1,179.7 2%
Gross profit 70.0 84.1 -17% 200.2 231.6 -14%
Operating expense 32.4 40.9 -21% 102.2 115.8 -12%
Income from
non-consolidated
affiliates and other
income 2.8 3.8 -26% 13.9 13.0 7%
Operating income 40.4 47.0 -14% 111.9 128.8 -13%
Financing costs 9.3 14.8 -37% 25.6 45.3 -43%
Income before taxes 31.1 32.2 -3% 86.3 83.5 3%
Provision for income
taxes 11.2 11.3 31.1 29.2
19.9 20.9 -5% 55.2 54.3 2%
Minority
stockholders'
interest 2.8 1.4 100% 8.3 6.9 20%
Net income $17.1 $19.5 -12% $46.9 $47.4 -1%
Weighted average
common shares
outstanding:
Basic 35.6 35.3 35.6 35.3
Diluted 35.7 35.5 35.7 35.4
Earnings per common
share:
Basic $0.48 $0.55 -13% $1.31 $1.34 -2%
Diluted $0.48 $0.55 -13% $1.31 $1.34 -2%
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In millions, except share amounts)
September 30,December 31,
2002 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $54 $65
Accounts receivable - net 220 279
Inventories 172 201
Prepaid expenses 11 10
Total current assets 457 555
Property, plant and equipment - net 1,135 1,293
Goodwill, net of accumulated amortization 270 283
Deferred tax asset 20 20
Investments 44 41
Other assets 35 35
Total assets $1,961 $2,227
Liabilities and stockholders' equity
Current liabilities
Short-term borrowings and current portion
of long-term debt 144 444
Accounts payable and accrued liabilities 195 231
Total current liabilities 339 675
Non-current liabilities 76 50
Long-term debt 473 312
Deferred income taxes 180 186
Minority interest in subsidiaries 89 147
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 - 37,659,887 issued
at September 30, 2002 and December 31, 2001 1 1
Additional paid in capital 1,073 1,073
Less: Treasury stock (common stock; 1,996,307
and 2,253,578 shares on September 30, 2002
and December 31, 2001, respectively) at cost (51) (56)
Deferred compensation - restricted stock (3) (3)
Accumulated other comprehensive loss (427) (333)
Retained earnings 211 175
Total stockholders' equity 804 857
Total liabilities and stockholders' equity $1,961 $2,227
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For The Nine Months
Ended September 30,
(In millions) 2002 2001
Cash provided by (used for) operating activities:
Net income $47 $47
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 79 98
Gain on sale of business (8) -
Decrease (increase) in trade working capital 44 (70)
Other 2 7
Cash provided by operating activities 164 82
Cash provided by (used for) investing activities:
Capital expenditures, net of proceeds on disposal (51) (57)
Proceeds from sale of business 35 -
Payments for acquisitions, net of cash acquired (42) (78)
Cash used for investing activities (58) (135)
Cash provided by (used for) financing activities:
Proceeds from borrowings 208 126
Payments on debt (309) (73)
Dividends paid (15) (19)
Issuance of common stock 3 1
Cash (used for) provided by financing activities (113) 35
Effect of foreign exchange rate changes on cash (4) (3)
Decrease in cash and cash equivalents (11) (21)
Cash and cash equivalents, beginning of period 65 41
Cash and cash equivalents, end of period $54 $20
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 Nine Months Ended Change
September 30, September 30,
2002 2001* % 2002 2001* %
Net sales
North America $321.9 $310.7 4% $916.1 $907.4 1%
South America 94.2 105.5 -11% 294.5 326.4 -10%
Asia/Africa 64.0 58.3 10% 187.6 177.5 6%
Total $480.1 $474.5 1% $1,398.2 $1,411.3 -1%
Operating income
North America $17.6 $18.3 -4% $41.3 $51.6 -20%
South America 13.6 16.3 -17% 42.2 50.7 -17%
Asia/Africa 14.4 11.3 27% 40.3 34.8 16%
Corporate (5.2) (4.3) 21% (16.5) (13.7) 20%
Non-recurring items - 5.4 - 4.6 5.4 -15%
Total $40.4 $47.0 -14% $111.9 $128.8 -13%
*Certain prior year amounts have been reclassified in order to conform with
current year presentation.
II. Estimated Source of 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 Share Earnings Per Share
Three Months Nine Months
Earnings Per Share September 30, 2001 $0.55 $1.34
Non-recurring items, net (0.10) (0.10)
Earnings Per Share September 30, 2001,
as adjusted $0.45 $1.24
Change
Volumes (0.01) (0.15)
Operating margin 0.14 0.17
Goodwill amortization 0.05 0.16
Foreign currency translation (0.20) (0.48)
Financing costs 0.10 0.36
Tax rate (0.01) (0.02)
Minority interest (0.04) (0.04)
Shares outstanding - (0.01)
Non-recurring items, net - 0.08
Net change 0.03 0.07
Earnings Per Share September 30, 2002 $0.48 $1.31
III. Capital expenditures
Capital expenditures for full year 2002 are expected to be $80 million versus
$94 million in 2001.
SOURCE
Corn Products International, Inc.
CONTACT:
Investor, Richard Vandervoort, +1-708-551-2595, or Media,
Jennifer Woomer Dinehart, +1-708-551-2602, both of Corn Products
International