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[CORNPRODUCTS INTERNATIONAL LETTERHEAD] -------------
PRESS RELEASE
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CONTACT: CHERYL BEEBE
708-563-5389
CORN PRODUCTS INTERNATIONAL REPORTS FIRST QUARTER
EARNINGS OF $0.22 PER SHARE
Bedford Park, IL, April 21, 1998 Corn Products International, an independent
company as of the beginning of 1998, today reported first quarter earnings of
$8.0 million or $0.22 per share or $0.21 per fully diluted share, compared
to a loss of $8.6 million on a pro-forma basis in the same quarter of
1997 or $0.24 per share. Better results in North America accounted for
an important part of the improvement, helped by a strong earnings gain in Other
Operations. Contributing also was a $3 million reduction in financing costs.
Konrad Schlatter, Chairman and Chief Executive Officer, said, "As a new
company, we are off to a good start. We are encouraged by the turnaround in our
North American operations and the continuing strong performance of our
businesses in the rest of the world. However, we still have a long way to go
before we return to the levels of profitability enjoyed during the first half
of the nineties. The results of this quarter, seasonally the slowest of the
year, reinforce our comfort with previously expressed expectations for earnings
per share in the $1.20 range for the year."
Highlights
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High Fructose Corn Syrup (HFCS) contracting for 1998 in the U.S. has been
completed with new contract prices increasing at the rate publicly reported by
the industry. While the improvement over 1997 is substantial, it still does not
restore adequate profitability relative to the investment in this product line.
Higher than usual volumes sold in the first quarter, while helpful to results,
have restrained inventory accumulation for the summer season, which may cause
some limitation on sales later in the year.
Strong volumes in several international markets, along with good free cash
flows, provide a basis for accelerating some capacity expansion programs
including an HFCS addition in Argentina and a grind increase in Pakistan. This
may lift 1998 and 1999 capital expenditures by $15-30 million from the
previously indicated levels of $70-$100 million.
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NOTE:
Commencing January 1, the fiscal year of our subsidiaries outside North America
has changed to that of our North American operation, which is the calendar
year. The following comments refer to a restated analysis that puts the entire
operation for 1997 on a December 31 year end basis. The "As Reported" column on
the attached financial statements contains the results previously reported
including the Other Operations on a September year end basis.
TOTAL COMPANY RESULTS
Net Sales increased to $339 million from $327 million in 1997 or 3.5% on a
volume increase of 9%, with solid growth in North America and Other Operations.
Net Sales grew at a lower rate than volume because prices declined in some
areas as corn costs decreased and the strong dollar reduced the value of some
international sales.
Operating income advanced to $17.9 million from an operating loss of $5.7
million in 1997. The improvement reflects better pricing in corn sweeteners in
the US market and improved margins elsewhere.
NORTH AMERICAN OPERATIONS
Net Sales increased by 2.1%, driven by a 7% volume increase, but were held back
by the lower exchange value of Canadian dollar sales. Pricing for new HFCS
contracts in the United States was up in line with the industry as publicly
reported by other corn refiners. Canadian HFCS prices declined becoming more
comparable to U.S. pricing. Corn syrup pricing showed a strong increase while
other products showed flat pricing. Pricing of grain related contracts, as well
as some existing multi-year contracts, tempered the overall price gain.
Earnings were negatively impacted by dextrose volumes which declined during the
quarter due to softness in the export segment and a slowdown in some pockets
in the domestic market.
Operating income showed a healthy advance in most product lines, as corn costs
were lower and manufacturing costs were on target.
OTHER OPERATIONS
Volumes increased by 16%, while Net Sales advanced 5.7%, reflecting the
effects of lower exchange rates and product mix. Growth continued to be driven
by double digit volume growth in high maltose corn syrup overcoming some sales
softness in other products after the Asian financial crisis.
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Operating income was up 12.4%, with the increasing margins paced by lower corn
costs.
FORWARD-LOOKING STATEMENTS
This Press Release contains certain forward-looking statements concerning the
Company. Although the Company believes its expectations reflected in such
forward-looking statements are based on reasonable assumptions, no assurance can
be given that such expectations will prove correct and actual results and
developments may differ materially. Important factors that could cause actual
results to differ include fluctuations in worldwide commodities markets and the
associated risks of hedging against such fluctuations; fluctuations in aggregate
industry supply and market demand; general economic, business and market
conditions in the various geographic regions and countries in which the Company
manufactures and sells its products, including fluctuations in the value of
local currencies; and increased competitive and/or customer pressure in the
corn refining industry. For a further description of these factors, see the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 and
Form 10-Q for the quarter ended March 31, 1998.
ABOUT CORN PRODUCTS INTERNATIONAL, INC.: Corn Products, formerly a division of
CPC International, Inc., was spun-off to shareholders on 12/31/97. Its
organization spans 21 countries and 38 plants with operations generating
approximately $2.5 billion in sales. It comprises fully consolidated operations
in 10 countries with 19 plants and sales of about $1.5 billion. It further
includes joint ventures and allied operations in an additional 11 countries,
with another 19 plants and unconsolidated sales of approximately $1 billion.
About 60% of its revenues are generated in North America; the rest comes from
Latin America, Asia, and Africa. It supplies products, derived chiefly from
corn, to more than 60 industries.
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CORN PRODUCTS INTERNATIONAL
CONSOLIDATED STATEMENTS OF INCOME
(All figures are in millions except per share amounts)
THREE MONTHS ENDED
MARCH 31, RESTATED
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1998 1997 1997
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Net Sales $339.0 $337.1 $327.4
Cost of sales 300.1 316.3 306.5
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Gross Profit 38.9 20.8 20.9
Operating Expense 25.3 27.1 26.8
Fees and income from unconsolidated subsidiaries 4.3 1.7 0.2
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Operating Income 17.9 -4.6 -5.7
Financing costs 5.0 8.1
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Income before income taxes 12.9 -12.7
Provision for income taxes 4.3 -4.6
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8.6 -8.1
Minority stockholder's interest 0.6 0.5
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Net income $ 8.0 -$ 8.6
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Average common shares outstanding:
Basic 35.6 35.6
Diluted 37.3 35.6
Earnings (loss) per common share
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Basic: Net earnings per common share $ .22 -$ .24
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Diluted: Net earnings per common share $ .21 -$ .24
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This is an unaudited interim statement prepared by management and reflects all
adjustments which are, in the opinion of management, necessary to a fair
statement of results for the interim periods.
Bedford Park, Ill, April 21, 1998 Jack C. Fortnum
Comptroller