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Ingredion announces results for Q4 2017

Feb 02, 2018 (MarketLine via COMTEX) --

Ingredion Incorporated, a global provider of ingredient solutions to diversified industries, has reported results for the fourth quarter 2017.

The results reported in accordance with U.S. generally accepted accounting principles ("GAAP") for 2017 and 2016 include items which are excluded from the non-GAAP financial measures which we present."We concluded 2017 with record earnings per share and operating income. Sales of our higher-value specialty portfolio grew to 28 percent of net sales for the year and the continued integration of our acquisitions of the Sun Flour rice business, TIC Gums and Shandong Huanong Specialty Corn position us for continued growth," said Jim Zallie, president and chief executive officer. "For the year, specialty-related volume growth, as well as our global optimization efforts drove margin expansion. North America, Asia Pacific and EMEA achieved record operating income. South America, although down, completed an important organizational restructuring, enabling a more cost competitive position going forward."We expect continued growth in our specialty portfolio, disciplined cost management, and ongoing capital investments to support margin expansion. Additionally, we will explore potential M&A opportunities that drive specialty growth. We remain committed to creating long-term shareholder value. For 2018, we anticipate adjusted EPS of $8.10 to $8.50," Zallie added.Financial HighlightsAt December 31, 2017, total debt and cash and short-term investments were $1.86 billion and $603 million, respectively, versus $1.96 billion and $516 million, respectively, at December 31, 2016. Cash and short-term investments were higher primarily driven by higher net income partially offset by stock repurchases and the finalization of the U.S.-Canada tax settlement.During the fourth quarter of 2017, net financing costs were $16 million, or $2 million lower than the year-ago period, due to modestly lower interest rates compared to the same period in 2016.For the fourth quarter of 2017, reported and adjusted effective tax rates were 44.9 percent and 32.5 percent, respectively, compared to reported and adjusted effective tax rates of 43.4 percent and 27.8 percent in the year-ago period. The reported rate for the fourth quarter of 2017 and the year-ago period includes charges of $23 million and $31 million, respectively, related to the enactment of the Tax Cuts and Jobs Act in December 2017 and settlement of a tax matter concerning the allocation of income between the United States and Canada. The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a one-time, estimated charge of $23 million in the fourth quarter. The estimated charge includes a transition tax on accumulated overseas earnings, foreign taxes on a portion of our unremitted earnings and the remeasurement of deferred tax assets and liabilities. Without these charges, the reported rate for the fourth quarter of 2017 and the year-ago period would have been 32.7 percent and 25.3 percent, respectively. The remainder of the rate increase is largely due to decreasedforeign tax creditsin 2017.2017 capital expenditures were $306 million, up $23 million from 2016 driven by investments in our cost savings and specialty growth initiatives.Business ReviewNet SalesFourth quarter and full-year net sales were up compared to the year-ago periods. In both periods, acquisition and specialty volume growth as well as changes in foreign currency exchange rates were partially offset by less favorable price/mix due to the pass through of lower raw material costs.Operating incomeFourth quarter reported and adjusted operating income were $203 million and $210 million, respectively. These were seven percent and eight percent increases, respectively, compared to $189 million of reported operating income and $194 million of adjusted operating income in the fourth quarter of 2016. The increases in reported and adjusted operating income were primarily due to margin expansion driven by improved operational efficiencies as well as acquisition- and specialty-related volume growth. These positives were partially offset by higher raw material costs in Asia-Pacific.Full-year 2017 reported and adjusted operating income were $842 million and $884 million, respectively. These were four percent and seven percent increases, respectively, compared to $808 million of reported operating income and $830 million of adjusted operating income in the year-ago period. The increases in reported and adjusted operating income were primarily due to acquisition- and specialty-related volume growth. These positives were partially offset by difficult macroeconomic conditions in South America and by the interruption of manufacturing activities in Argentina and resulting temporary higher costs during the first half of the year.Fourth quarter reported operating income was lower than adjusted operating income by $7 million. Restructuring costs related to abandonment of certain assets related to stevia leaf extraction were $13 million while other employee-related severance was $2 million. Acquisition and integration costs associated with TIC Gums were $1 million. These expenses were partially offset by $9 million of other income for cash proceeds from insurance recovery primarily related to capital reconstruction.Full-year 2017 reported operating income was lower than adjusted operating income by $42 million. Restructuring costs include: Argentina at $17 million, abandonment of certain assets related to stevia leaf extraction at $13 million, finance transformation at $6 million, and other employee-related severance at $2 million. Acquisition and integration costs associated with TIC Gums were $13 million. These expenses were partially offset by $9 million of other income for cash proceeds from insurance recovery primarily related to capital reconstruction. North AmericaOperating incomeFourth quarter operating income increased from $137 million to $141 million. The inclusion of the acquired TIC Gums business largely accounted for the increase. This was partially offset by higher operating costs in Mexico.Full-year operating income increased from $610 million to $661 million. Margin expansion driven by operational efficiencies as well as the inclusion of the acquired TIC Gums business and specialty ingredient volume growth accounted for the increase.South AmericaOperating incomeOperating income in the fourth quarter was $36 million, an increase of $7 million from a year ago. Volume growth and operational efficiencies accounted for the increase.Full-year operating income was $80 million, down $9 million from a year ago. The decrease was largely a result of Argentina's difficult macroeconomic conditions, the interruption of manufacturing activities in Argentina and resulting temporary higher costs during the first half of the year. This was partially offset by volume growth and operational efficiencies in Brazil.Asia PacificOperating incomeFourth quarter operating income was $24 million, flat to a year ago. Volume growth was offset by less favorable price/mix due to core customer mix diversification and a lag in the pass through of higher tapioca costs.Full-year operating income was $112 million, up $1 million from a year ago. The increase was largely due to volume growth partially offset by less favorable price/mix due to core customer mix diversification and a lag in the pass through of higher tapioca costs.Europe, Middle East, Africa (EMEA)Operating incomeFourth quarter operating income was $30 million, up $4 million from a year ago while full-year operating income was $113 million, up $7 million from a year ago. The increase in both periods was driven by volume growth and favorable price/mix.

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