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    Ingredion (INGR)

    INGR Q1 2025: 4th Straight Quarter of Mid-Single-Digit Volume Growth

    Reported on May 9, 2025 (Before Market Open)
    Pre-Earnings Price$133.63Last close (May 5, 2025)
    Post-Earnings Price$137.47Open (May 6, 2025)
    Price Change
    $3.84(+2.87%)
    • Consistent Volume Momentum: Texture and Healthful Solutions have shown robust and repeated sales volume growth—with Q1 marking the fourth consecutive quarter of net sales volume gains—which suggests strong underlying demand and potential for continued organic growth.
    • Stabilized Pricing and Higher-Margin Mix: The discussion highlighted that despite earlier strong price/mix dynamics, the business now benefits from a stable price environment and increasing adoption of high-margin clean label solutions, reinforcing resilient profitability.
    • Disciplined Cost Management and Capital Allocation: The company’s targeted hedging strategy to cover over 80–85% of raw material needs and a commitment to share repurchases (targeting $100 million) signal sound financial management that can drive shareholder value in a volatile market.
    • Tariff Uncertainty: The management highlighted that evolving tariffs may force adjustments in supply chain routing and incur incremental costs, which could suppress margins in upcoming quarters.
    • Macroeconomic Concerns: There is potential risk from ongoing global economic uncertainty—such as a shallow U.S. recession and consumer uncertainty—that could dampen sales volume growth and put pressure on margins.
    • Segment-Specific Risks: Unresolved issues like the pending review of the Pakistan affiliate (comparable in size to the South Korea business) and reliance on volatile LATAM performance expose the company to operational and integration risks.
    MetricYoY ChangeReason

    Total Revenue

    –3.7% (from $1,882M in Q1 2024 to $1,813M in Q1 2025)

    A continued decline in sales reflects legacy challenges such as negative price/mix effects and volume declines observed in previous periods, which carried over into Q1 2025 despite efforts to stabilize the revenue base.

    Operating Income

    +29% (from $213M in Q1 2024 to $276M in Q1 2025)

    The strong improvement is driven by enhanced operational efficiencies and cost management initiatives that built on earlier margin improvements, offsetting earlier pricing and volume pressures.

    Net Income

    –9% (from $218M in Q1 2024 to $199M in Q1 2025)

    Despite a higher operating margin, net income declined likely due to increased non-operating expenses, tax impacts, or financing costs that eroded the benefits of improved operations, contrasting with the operating recovery seen previously.

    Latin America Revenue

    –7% (from $616M in Q1 2024 to $573M in Q1 2025)

    Revenue in this region fell by approximately 7%, continuing the trend of foreign exchange and unfavorable price/mix pressures that were evident in prior periods.

    U.S./Canada Revenue

    –3.8% (from $541M in Q1 2024 to $520M in Q1 2025)

    The slight decline is attributed to the carryover impact of lower price mix adjustments, which had affected previous period results as well.

    All Other Regions Revenue

    –7.8% (from $128M in Q1 2024 to $118M in Q1 2025)

    The decline reflects the ongoing impact of strategic divestitures (such as the South Korea business) that affected prior results, continuing to weigh on the revenue in these regions.

    Cash Flow from Operating Activities

    –63% (from $209M in Q1 2024 to $77M in Q1 2025)

    The sharp drop is driven by less favorable working capital changes and adjustments in operating activities compared to Q1 2024, indicating challenges in converting improved operating income into cash.

    Cash and Cash Equivalents

    +91% (from $438M in Q1 2024 to $837M in Q1 2025)

    The near doubling reflects a significant liquidity build-up from improved financing outcomes and proceeds from asset sales, building on earlier cash management strategies.

    Inventories

    –13% (from $1,344M in Q1 2024 to $1,172M in Q1 2025)

    The reduction indicates tighter inventory control and lower production levels, aligning with reduced sales forecasts and cost management measures that were initiated in previous periods.

    Total Stockholders’ Equity

    +7% (from $3,740M in Q1 2024 to $3,998M in Q1 2025)

    The increase results from higher retained earnings driven by strong operating performance, although partly offset by share repurchases and dividend payments, consistent with trends noted in earlier periods.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Sales Volume Growth

    FY 2025

    “Continued sales volume growth is anticipated”

    “Anticipated sales volume growth; net sales expected to be flat to up low single digits”

    no change

    Adjusted Operating Income

    FY 2025

    “Expected to be up mid-single digits”

    “Expected to be flat to down low single digits”

    lowered

    Financing Costs

    FY 2025

    “$50 million to $70 million”

    “$40 million to $60 million”

    lowered

    Diluted Weighted Average Shares Outstanding

    FY 2025

    “65.5 million to 66 million shares”

    “65 million to 66 million shares”

    lowered

    Share Repurchase Objective

    FY 2025

    “At least $100 million”

    “Aim to repurchase $100 million”

    no change

    Cash from Operations

    FY 2025

    “$800 million to $950 million”

    “$825 million to $950 million”

    raised

    Effective Tax Rates

    FY 2025

    “26% to 27.5%”

    “No current guidance”

    no current guidance

    EPS

    FY 2025

    “EPS growth between 1% to 8.5%”

    “No current guidance”

    no current guidance

    Adjusted EPS Range

    FY 2025

    “No prior guidance”

    “$10.90 to $11.60”

    no prior guidance

    Segment Guidance

    FY 2025

    “Detailed segment breakdown provided”

    “Holding to its guidance for each segment”

    no change

    MetricPeriodGuidanceActualPerformance
    Net Sales
    Q1 2025
    Down low single digits
    1,813 million
    Met
    Operating Income
    Q1 2025
    Up high single digits
    276 million
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Texture and Healthful Solutions

    Consistently highlighted across Q4 2024 , Q3 2024 and Q2 2024 with double‐digit or strong single‐digit volume growth, margin improvements, and customer collaborations driving performance.

    Q1 2025 emphasized robust operating income growth (+34%), continued volume increases (7%) and improved margins (16.4%) underpinned by clean label and affordable formulations.

    Consistent performance with an accent on clean label/customer collaboration benefits; sentiment remains strongly positive with incremental margin gains.

    Pricing Dynamics and Margin Management

    Discussed in Q4 2024 with significant price/mix challenges and in Q3 2024 via contract pricing adjustments and hedging benefits , as well as in Q2 2024 with strategic pricing adjustments to manage lower raw material costs.

    In Q1 2025, they noted the ongoing impact of lower corn costs and a $48 million decrease in price/mix, but improvements in gross and operating margins were apparent across segments.

    Ongoing pressure from raw material pass-through is being mitigated by strong cost management and hedging efforts; sentiment appears cautiously optimistic with expectations for stabilized price/mix effects going forward.

    Cost Management, Hedging Strategies, and Capital Allocation

    Across previous periods (Q4 , Q3 , Q2 ) the focus was on the Cost2Compete program, structured capital investments, robust hedging (covering 80%–85% of corn needs) and disciplined shareholder returns.

    Q1 2025 reaffirmed commitment to the $50 million cost-to-compete target, detailed plant closures/upgrades, extensive hedging practices, and active capital allocation (CapEx of $92 million, share repurchases).

    The strategic emphasis on efficiency, hedging, and balanced capital deployment has been consistent with continued positive sentiment and an improved investment outlook.

    Macroeconomic Conditions and Currency Fluctuations

    Previously addressed in Q4 2024 (noting FX impacts and regional currency challenges ), Q3 2024 (favorable FX gains and lower financing costs ), and Q2 2024 (stable outcomes in Argentina, Brazil, Mexico ).

    In Q1 2025, cautious optimism prevails as FX-related net sales impacts ($40 million) and stable currency conditions in key regions (e.g. Argentine peso) are highlighted alongside global economic uncertainty.

    While macro risks and FX volatility remain a concern, improvements in regional currency stability and hedging continue to offset broader economic uncertainties.

    Protein Fortification Business Turnaround Challenges

    Q4 2024 detailed that the business remained loss-making despite strong yearly improvements ; Q3 2024 focused on an active turnaround plan driven by higher-value pea protein ; Q2 2024 saw “green shoots” amid efforts to reduce operating losses.

    Q1 2025 provided little explicit mention of turnaround challenges, instead noting “very nice double-digit growth” in the segment, suggesting a shift toward a positive narrative.

    Discussion has evolved from explicit turnaround challenges to a more understated sentiment as early gains appear to be translating into growth, hinting at gradual stabilization.

    Operational Restructuring and Segmentation Improvements

    Q4 2024 emphasized reorganization, resegmentation, facility closures, and network optimization ; Q3 2024 underscored benefits from the mature global operating model and Cost2Compete initiatives ; Q2 2024 detailed segmentation refresh and operational excellence enhancements.

    Q1 2025 continued the focus with further plant closures, network optimization and targeted investments (e.g. a $50 million Cedar Rapids investment) that improve segment focus and efficiency.

    There is a clear and consistent drive to streamline operations and enhance segment focus, translating into improved efficiency and margin performance; the sentiment remains strongly positive.

    Geographic Expansion and Regional Performance

    Q2 2024 highlighted broad-based volume growth across U.S./Canada, Middle East/Africa, Asia, and LATAM ; Q3 2024 noted improved European consumer behavior, Latin American operational investments, and U.S./Canada contract renewals ; Q4 2024 reported solid performance in U.S./Canada and LATAM with strategic network optimization.

    Q1 2025 showcased strong regional performance with robust growth in both the Texture segment and in key regions like LATAM (notably positive operating income improvements) and U.S./Canada, plus strategic capacity expansion investments.

    Consistent global expansion with steady improvements in regional performance; continued geographic diversification remains a key driver of future growth, with sentiment clearly supportive.

    Segment-Specific Risks and Integration Challenges

    Q4 2024 mentioned implicit challenges via cost adjustments, facility closures, and integration of network optimizations ; Q3 and Q2 2024 had minimal focus on explicit risks or integration issues.

    Q1 2025 did not explicitly address segment-specific risks or integration challenges, suggesting that such issues have receded or been largely integrated into prior restructuring efforts.

    The diminished emphasis in Q1 2025 indicates that earlier integration challenges may be resolving, reducing near-term risk perceptions and allowing focus on growth and efficiency.

    1. Full-Year Guidance
      Q: EPS drivers for Q2–Q4?
      A: Management explained that the upside will come from tariff resolution, improved consumer sentiment, a strong corn crop, and a weaker dollar, while incremental supply chain costs and a potential shallow recession could drive the lower end.

    2. Segment Drivers
      Q: Which segments lead next quarter?
      A: They expect Texture and Healthful Solutions to deliver steady mid-single-digit volume growth, whereas some U.S./Canada and LATAM segments may face seasonal weakness due to last year’s strong performance.

    3. Volume Outlook
      Q: What are the volume expectations?
      A: Management anticipates overall sales volumes to remain in the mid-single digits, driven by ongoing customer demand in key segments.

    4. Tariff Impact
      Q: Any Q1 pull forward from tariffs?
      A: They clarified that there was no pull forward effect; current tariffs are minimal since most production is local, and impacts are expected to be manageable for the balance of the year.

    5. Hedging Impact
      Q: How do unhedged corn costs affect margins?
      A: With hedging covering over 80–85% of their needs, any benefit from unhedged costs is likely to appear later, particularly in Q4, keeping material cost volatility in check.

    6. Sales Mix
      Q: Are trade downs affecting mix?
      A: Management noted that customers are buying consistent products; the strong performance of clean label solutions supports pricing and margins despite broader consumer uncertainty.

    7. Price/Mix Outlook
      Q: What is the outlook for price/mix?
      A: Previous high single-digit price/mix increases have moderated to a minimal impact, with robust volume growth offsetting any pricing pressure.

    8. Share Repurchase
      Q: Will buybacks exceed $100M?
      A: They are maintaining their target of $100 million in share repurchases, carefully balancing optimal stock pricing and shareholder return.

    9. LATAM Margin
      Q: How are LATAM margins performing?
      A: The LATAM segment delivered strong margin uplift, driven by improved joint venture results in Argentina and strategic product mix adjustments in the region.

    10. Argentina Pricing
      Q: What about Argentine pricing trends?
      A: Despite past volatility, pricing in Argentina continues to be influenced by persistent inflation, with management adjusting prices accordingly.

    11. Pakistan Size
      Q: How significant is the Pakistan affiliate?
      A: It is similar in size to the former South Korea business, though management is in the early stages and has not disclosed details on proceeds usage.

    12. Reformulation Demand
      Q: What’s the status on reformulations?
      A: There is robust, ongoing demand from customers aiming for healthier, more affordable recipes, but specifics for Q2 remain to be detailed.

    Research analysts covering Ingredion.