Corn Products: reports 74 % increase in Q3/2008 diluted EPS

Westchester / IL. (cp) Corn Products International, Inc., a leading global provider of agriculturally derived ingredients for diversified markets, reported record quarterly diluted earnings per share of 1,15 USD for the third quarter ended September 30, 2008 – a 74 percent increase compared with diluted earnings per share of 0,66 USD a year ago. The third quarter of 2007 included a five-cent gain from the Company´s holdings in CME Group Inc. Net income of 88 million USD in the third quarter of 2008 improved 72 percent versus 51 million USD in the prior year.

For the 11th consecutive quarter, net sales reached a record level. Net sales of 1,08 billion USD in the third quarter of 2008 increased 24 percent versus 877 million USD in the prior-year period. Continuing the trend from the first half of 2008, the higher net sales reflected stronger price/product mix.

Gross profit of 204 million USD in the third quarter of 2008 increased 44 percent compared with 142 million USD a year ago. The increase was the result of significantly higher North and South American results due predominantly to strong pricing actions. The gross margin of 18,8 percent compared favorably to 16,2 percent last year. Strong co-product pricing helped offset a significant increase in gross corn costs.

Operating expenses of 67 million USD in the third quarter of 2008 compared with 62 million USD a year ago. Operating expenses as a percentage of net sales in this year´s third quarter declined to 6,2 percent versus 7,0 percent last year. Other income in the third quarter of 2008 was eleven million USD, which included a four million USD insurance settlement and a three million USD gain from a land sale.

Operating income of 148 million USD in the third quarter of 2008 grew 68 percent versus 88 million USD in 2007. The operating margin improved to 13,6 percent from 10,0 percent last year.

Net financing costs in the third quarter of 2008 declined four percent to 9,6 million USD versus the prior year. The 2008 third-quarter effective tax rate of 34,9 percent compared with 33,1 percent in 2007.

Regional Business Segment Performance

Regional results for the quarter ended September 30, 2008 were as follows:

North America
Net sales of 660 million USD increased 22 percent from 542 million USD in 2007 due to favorable price/product mix. Volumes were down slightly and the foreign currency impact was essentially neutral. Operating income of 105 million USD grew 80 percent versus 58 million USD last year. All three country businesses contributed to the increased profitability.

South America
Net sales of 305 million USD rose 33 percent compared with 230 million USD a year ago as a result of positive price/product mix and foreign currency translations. Volumes were slightly positive. Operating income of 44 million USD grew 68 percent from 26 million USD in the prior year due to a significant improvement in Brazil, as well as increases in the Southern Cone and Andean regions.

Asia/Africa
Net sales of 119 million USD increased 13 percent versus 105 million USD last year due to significantly improved price/product mix, partially offset by unfavorable foreign currency translation and lower volumes. Operating income of ten million USD was relatively unchanged from a year ago, reflecting strong growth in Pakistan, Thailand and China offset by a decline in South Korea.

2008 Nine-Month Results

For the nine months of 2008, the Company reported net income of 221 million USD, or 2,90 USD per diluted share, compared with net income of 152 million USD, or 1,98 USD per diluted share, last year. Included in this year´s nine months results was a four-cent negative impact from costs related to the pending merger with Bunge Limited. Included in last year´s nine months results was a five-cent gain from the Company´s holdings in CME Group Inc.

Gross profit and operating income increased 27 percent and 39 percent, respectively, versus the prior-year period.

Net sales of 3,04 billion USD grew 22 percent versus 2,50 billion USD in the prior year. Favorable price/product mix and, to a lesser degree, positive foreign currency translations drove the increase, which was partially offset by a slight decline in volumes.

The effective tax rate for the nine months of 2008 was 34,5 percent versus 33,3 percent in 2007.

Balance Sheet and Cash Flow

The Company´s balance sheet remained solid as of September 30, 2008. Net debt (total debt less cash) was 612 million USD versus 474 million USD at December 31, 2007 and 463 million USD at September 30, 2007. Total debt to capitalization of 29,4 percent at September 30, 2008 compared with 26,6 percent at year-end 2007.

Cash provided by operations was 16 million USD for the nine months of 2008. Net income was 221 million USD, depreciation and amortization was 98 million USD and working capital increased 293 million USD. Cash paid on margin accounts relating to corn futures contracts was 186 million USD and represents the majority of the working capital increase (source).