Corn Products International, one of the world's largest corn refiners and a major supplier of food ingredients, reported a five per cent decline in first quarter earnings, with net sales for the period down from $454 million to $432 million (€486m).
However it said that sales were up one per cent excluding the impact of weaker currencies. It also reported gross profit of $58.8 million (€66m) for the 2002 first quarter, down 22 per cent from $75 million for the same period last year.
The fully diluted earnings for the period ended 31 March 2002 were $0.31 per share, compared to $0.36 per share last year. The current period results included non-recurring 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.
Corn Products recorded an $8 million pretax gain from the February 2002 sale of its US enzyme facility and incurred a net $3 million pretax restructuring charge associated with further workforce reductions in North America.
For the first quarter of 2002, compared with the same period last year, operating income declined 20 per cent to $31.5 million, down from $39.6 million, and net income was $11.2 million, down from $12.7 million, or 12 percent.
Chairman, president and chief executive officer, Sam Scott said : ``Our ongoing priority is to improve North American profitability. During the first quarter, we reduced our North American workforce by an additional 200 people. We expect an immediate payback from these actions.''
The company attributes the poor results largely to the impact from Mexico's imposition of a confiscatory tax on soft drinks using high fructose corn syrup (HFCS). On March 5, 2002, the Mexican government temporarily suspended the tax until September 30, 2002.
``Although we are selling HFCS today to the beverage industry, we are operating our Mexican HFCS channel at a reduced rate,'' Scott said, and added: ``We are disappointed in the level of orders that we have received following the temporary suspension of the tax. While we are hopeful for a permanent solution ahead of the fall deadline, it is likely that more time will be needed for our Mexican customers to return to more normal purchasing levels.''
Looking ahead, Scott said: ``We expect our 2002 earnings per share to exceed last year's performance. Our North American cost reduction efforts and our projections for stronger performance in our US and Canadian businesses are contributing to this earnings growth. "