Corn Products International, Inc. Reports Second Quarter 2002 Results
BEDFORD PARK, Ill., July 23 /PRNewswire-FirstCall/ -- Corn Products International, Inc. (NYSE: CPO) today reported fully diluted earnings of $0.52 per share for the quarter ended June 30, 2002, compared to fully diluted earnings of $0.43 per share for the prior year second quarter.
For the second quarter of 2002 compared with the same period in 2001 --
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Net sales were $486 million, up slightly from $482 million
-
Gross profit was $72 million versus $73 million
-
Operating income was $40 million versus $42 million
-
Net income was $19 million, up from $15 million
In the second quarter of 2002, sales and operating income were affected by a volume reduction of high fructose corn syrup (HFCS) in Mexico caused by the slow resumption of sales, following the temporary suspension of a tax imposed on soft drinks sweetened with HFCS, and by the continuing economic problems in South America. Net income increased as financing costs and goodwill amortization declined, compared to the prior year period. Net cash flow from operations increased to $82 million from $22 million in the second quarter last year, driven mainly by improved working capital management. The improved cash flow was used primarily to pay down debt, thus reducing our financing costs.
Decreased debt levels, coupled with lower interest rates, resulted in financing costs being reduced by more than 50 percent to $7 million in the second quarter from $15 million in the same quarter last year. Goodwill amortization was $3-million pretax in the second quarter 2001. The effective tax rate is 36 percent versus 35 percent last year.
"Our business performed well in the second quarter this year, despite the HFCS situation in Mexico and economic problems in South America," said Sam Scott, chairman, president and chief executive officer. "We were able to achieve solid net income for the quarter, increased cash flow and reduced debt. As a direct result of our focus on cash flow and debt reduction, we improved net income, despite relatively flat sales and volume."
Scott added, "The continuing performance improvement in the United States, previously disclosed North American cost reductions, progress in the Southern Cone of South America and strong performance in Asia, mitigated to some extent the reduction in HFCS sales to soft-drink bottlers in Mexico."
SIX MONTH RESULTS FOR 2002
Through June 30, 2002, fully diluted earnings were $0.83 per share, which included nonrecurring earnings of $0.08 per fully diluted share, consisting 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 last year of $0.79 per fully diluted share, which included goodwill amortization of $0.11 per fully diluted share.
Including all items, the results for the first six months of 2002, compared with the same period in 2001, were as follows --
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Net sales were $918 million versus $937 million
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Gross profit was $130 million versus $148 million
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Operating income was $72 million versus $82 million
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Net income was $30 million, up from $28 million
Business breakdown by region
2002 second quarter results versus the same period last year by region reflected --
In North America
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Net sales were $318 million, up from $317 million (includes $5 million in 2001 from the US enzyme operation that was sold in first quarter 2002)
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Operating income was $17 million, down 7 percent
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Volume was constant with last year
Net sales reflect higher volumes for all product lines throughout the region with the exception of HFCS sales in Mexico. Operating income in the April to June 2002 period was down slightly from the prior year as gains in the United States could not overcome the decline in Mexico.
In South America
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Net sales were $102 million versus $104 million
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Operating income was $15 million, down 3 percent
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Volume was up 2 percent
Net sales declined due to currency and economic weakness in the region, while operating income dipped. Improved performance in the Southern Cone of South America partially offset the decline in Brazil caused by the economic slowdown in that country.
In Asia/Africa
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Net sales were $66 million, up from $62 million
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Operating income was $14 million, up 7 percent
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Volume rose 4.5 percent
As the Company's Asian strategy continues to deliver growth, the Division recorded another strong quarter. Net sales and operating income were boosted by higher volumes and favorable exchange rates.
OUTLOOK
The Company confirmed that its outlook for 2002 is expected to be at or near 2001 results, as stated in its July 15, 2002, press release.
"Until there is a permanent resolution of the Mexican value-added tax (VAT) on soft drinks sweetened with HFCS, we expect no HFCS sales to the soft drink industry there," Scott said. "And, although interest costs in the second half of the year will be up over the first six months of the year, we anticipate they will be significantly better than last year."
Scott concluded, "Although the Mexican VAT on HFCS sweetened soft drinks has been resumed, we believe that the problem will be resolved by the United States and Mexico. We are encouraged by recent news reports, indicating that forward steps appear to be underway in the negotiations between our two countries. We also believe that we have positioned our Company to be on solid ground when a resolution ultimately occurs. Our debt at $680 million is substantially below last year's $756 million, and we expect further reduction in the second half of this year. We plan to continue our Company-wide focus on activities to improve cash generation and to reduce costs. Finally, in terms of income growth, we look forward to ongoing strong performance in Asia, as well as continuing improvement in the United States and the Southern Cone of South America."
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 Bedford Park, 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 Six Months Ended Change
June 30, % June 30, %
2002 2001 2002 2001
Net sales before
shipping and
handling costs $514.7 $521.4 -1% $972.6 $1,020.0 -5%
Less: Shipping and
handling costs 28.5 39.2 -27% 54.4 83.3 -35%
Net sales 486.2 482.2 1% 918.2 936.7 -2%
Cost of sales 414.7 409.7 1% 787.8 789.2 0%
Gross profit 71.5 72.5 -1% 130.4 147.5 -12%
Operating expense 33.0 35.1 -6% 69.8 74.9 -7%
Income from
non-consolidated
affiliates and other
income 1.5 4.8 -69% 11.0 9.2 20%
Operating income 40.0 42.2 -5% 71.6 81.8 -12%
Financing costs 6.7 15.0 -55% 16.3 30.6 -47%
Income before taxes 33.3 27.2 22% 55.3 51.2 8%
Provision for income
taxes 12.0 9.5 19.9 17.9
21.3 17.7 20% 35.4 33.3 6%
Minority stockholders'
interest 2.7 2.4 13% 5.5 5.4 2%
Net income $18.6 $15.3 22% $29.9 $27.9 7%
Weighted average
common shares
outstanding:
Basic 35.6 35.3 35.5 35.3
Diluted 35.8 35.4 35.7 35.4
Earnings per
common share:
Basic $0.52 $0.43 21% $0.83 $0.79 5%
Diluted $0.52 $0.43 21% $0.83 $0.79 5%
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In millions, except share amounts) June 30, December 31,
2002 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $51 $65
Accounts receivable - net 245 279
Inventories 192 201
Prepaid expenses 12 10
Total current assets 500 555
Property, plant and equipment - net 1,186 1,293
Goodwill, net of accumulated amortization 273 283
Deferred tax asset 20 20
Investments 42 41
Other assets 38 35
Total assets $2,059 $2,227
Liabilities and stockholders' equity
Current liabilities
Short-term borrowings and current portion
of long-term debt 189 444
Accounts payable and accrued liabilities 210 231
Total current liabilities 399 675
Non-current liabilities 63 50
Long-term debt 491 312
Deferred income taxes 184 186
Minority interest in subsidiaries 97 147
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 June 30, 2002 and December 31, 2001 1 1
Additional paid in capital 1,073 1,073
Less: Treasury stock (common stock; 2,047,824
and 2,253,578 shares on June 30, 2002 and
December 31, 2001, respectively) at cost (51) (56)
Deferred compensation - restricted stock (3) (3)
Accumulated other comprehensive loss (392) (333)
Retained earnings 197 175
Total stockholders' equity 825 857
Total liabilities and stockholders' equity $2,059 $2,227
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For The Six Months
Ended June 30,
(In millions) 2002 2001
Cash provided by (used for) operating activities:
Net income $30 $28
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 54 66
Gain on sale of business (8) -
Decrease (increase) in trade working capital 25 (71)
Other 8 (5)
Cash provided by operating activities 109 18
Cash provided by (used for) investing activities:
Capital expenditures, net of proceeds on disposal (32) (39)
Proceeds from sale of business 35 -
Payments for acquisitions, net of cash acquired (42) (77)
Cash used for investing activities (39) (116)
Cash provided by (used for) financing activities:
Proceeds from borrowings 9 122
Payments on debt (82) (21)
Dividends paid (11) (15)
Issuance of common stock 3 -
Cash (used for) provided by financing activities (81) 86
Effect of foreign exchange rate changes on cash (3) (2)
Decrease in cash and cash equivalents (14) (14)
Cash and cash equivalents, beginning of period 65 41
Cash and cash equivalents, end of period $51 $27
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 Six Months Ended Change
June 30, June 30,
2002 2001* % 2002 2001* %
Net sales
North America $318.3 $316.6 1% $594.2 $596.7 0%
South America 102.2 103.6 -1% 200.4 220.9 -9%
Asia/Africa 65.7 62.0 6% 123.6 119.1 4%
Total $486.2 $482.2 1% $918.2 $936.7 -2%
Operating income
North America $17.0 $18.3 -7% $23.8 $33.3 -29%
South America 14.9 15.4 -3% 28.6 34.3 -17%
Asia/Africa 14.0 13.1 7% 25.9 23.6 10%
Corporate (5.9) (4.6) 28% (11.3) (9.4) 20%
Non-recurring items - - 4.6 -
Total $40.0 $42.2 -5% $71.6 $81.8 -12%
-
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 Six Months
Ended June 30
The following is a list of the major items that impacted our second quarter and year-to-date results. The amounts are calculated on a net after- tax basis and attempt to estimate total business effects.
Earnings Earnings
Per Share Per Share
Three Months Six Months
Earnings Per Share June 30, 2001 $0.43 $0.79
Change
Volumes - (0.13)
Operating margin 0.07 0.02
Goodwill amortization 0.05 0.11
Foreign currency translation (0.16) (0.27)
Financing costs 0.15 0.25
Tax rate (0.01) (0.02)
Minority interest (0.01) -
Non-recurring items, net - 0.08
Net Change 0.09 0.04
Earnings Per Share June 30, 2002 $0.52 $0.83
III. Capital expenditures
Capital expenditures were $32 million and $39 million for the six months ended June 30, 2002 and 2001, respectively.
Capital expenditures for 2002 are expected to be $80 million versus $94 million in 2001.
SOURCE
Corn Products International, Inc.
CONTACT:
Investor, Richard Vandervoort, +1-708-563-6824, or Media,
Jennifer Woomer Dinehart, +1-708-563-6580, both of Corn Products
International