Ingredion Inc. has reported strong fourth-quarter results, showcasing impressive earnings for 2024, even amidst a revenue decline largely attributed to lower raw material prices.
The company’s prudent forecasts for 2025 have drawn the attention of market analysts, leading to a minor dip in its stock price following the release of the financial results and projections.
Quarterly Performance Highlights
James P. Zallie, the president and CEO, celebrated the company’s record-setting financial achievements for Q4.
He pointed out the increase in sales volume, particularly within the Texture and Healthful Solutions sectors, as well as outstanding performance from the Food and Industrial Ingredients divisions across the US, Canada, and Latin America.
Zallie attributed much of this success to a recent restructuring that has better positioned teams to capitalize on targeted market opportunities, setting the stage for sustained growth.
In a pivotal change introduced late last year, Ingredion shifted from a regional structure to one organized around production capabilities.
This new focus emphasizes texture, healthful solutions, and food and industrial ingredients, streamlining their diverse portfolio that includes starches, sweeteners, co-products, corn oil, and specialty ingredients.
Zallie noted that the Food & Industrial Ingredients division in the US and Canada thrived thanks to renewed long-term customer contracts, enabling the company to combat inflationary pressures and improve profit margins.
As a result, operating income surged in Q4.
Meanwhile, in Latin America, both the Mexican and Andean markets performed well, even amidst a decline in sweetener demand, due to the agility of the business model to effectively manage pricing amid fluctuations in corn costs and currency values.
Annual Financial Overview
For the entire year of 2024, Ingredion reported a net income of $647 million, equating to earnings of $9.88 per share—a slight uptick from the previous year’s $643 million or $9.74 per share.
However, net sales decreased to $7.43 billion, reflecting a 9% decline from the previous $8.16 billion.
The company also reported $127 million in restructuring costs, a significant rise from $11 million in the prior year, though adjusted earnings saw a remarkable 13% boost.
The Texture & Healthful Solutions division saw operating income reach $350 million, an 11% decline from 2023.
Sales in this division fell by 4% to $2.37 billion.
In contrast, the US and Canada segment of Food & Industrial Ingredients enjoyed a 25% rise in operating income, reaching $373 million, despite an 8% drop in sales to $2.16 billion.
Latin America mirrored this trend, logging a 7% growth in operating income to $483 million, with sales hitting $2.45 billion, down by 7%.
Future Projections and Market Outlook
Zallie highlighted the positive trajectory in Texture and Healthful Solutions, noting a second consecutive quarter of double-digit sales volume growth.
Driving this momentum were products linked to yogurt, beverages, and batter in the US market.
Despite challenges, particularly in Western Europe where food inflation remains high, the company remains hopeful.
Zallie mentioned that categories relevant to Ingredion tended to outperform the overall food market last year, with dressings and ready-to-eat meals experiencing noteworthy recovery as consumer habits evolved with the return to the workplace.
In North America, strong demand in papermaking and packaging bolstered Ingredion’s Food and Industrial segment, despite facing some difficulties with sweetener shipments.
The gross margins demonstrated a robust increase of 270 basis points, climbing to 24%.
James Gray, Ingredion’s executive vice president and CFO, conveyed caution regarding geopolitical uncertainties and potential trade tensions.
However, he emphasized the advantages of local manufacturing capabilities in their markets.
He pointed out that Ingredion stands out as the sole corn wet miller in Canada and Mexico, which enables them to cater primarily to local customers.
Looking forward to 2025, Ingredion projects adjusted earnings per share ranging from $10.75 to $11.55, suggesting a potential increase of 0.9% to 8%.
The company anticipates modest growth in net sales driven by increasing volume demand, albeit somewhat moderated by price mix and currency influences.
Zallie expressed optimism about Ingredion’s strategic outlook as they step into 2025, citing favorable savings from their Cost2Compete initiative as crucial for navigating the current business landscape.
He envisions enhanced customer collaborations that will propel growth in the coming year.
While some analysts raised eyebrows at the modest growth expectations, Gray reassured that uncertainties are inherent to the business environment.
They remain vigilant regarding key factors that could impact financial performance.
After disclosing their quarterly results, Ingredion’s shares saw a slight decrease, closing at $127.13, down 6% from the prior closing price.
In the fourth quarter, the company reported a net income of $95 million, or $1.46 per share, which marked a year-over-year decline but highlighted an impressive 34% increase in adjusted earnings per share.
Source: Foodbusinessnews