Q1 2024 Earnings Summary
Reported on Feb 18, 2025 (Before Market Open)
Pre-Earnings Price$116.57Last close (May 7, 2024)
Post-Earnings Price$117.25Open (May 8, 2024)
Price Change
$0.68(+0.58%)
- Recovery and Growth in Volume Demand: Ingredion is experiencing a gradual improvement in volumes, particularly in the modified starch and specialty starch categories, with solid growth in April. The company anticipates a mid-single-digit uptick in sales volumes demand for 2024 across its segments. Additionally, there was double-digit volume growth in China for the quarter, supported by lower corn prices, which should further boost volume growth going forward.
- Cost Savings Initiatives to Enhance Profitability: Ingredion has launched the Cost2Compete program, aiming to deliver $50 million of run-rate savings by 2025. The company has a strong track record of delivering cost takeouts, previously exceeding targets in its Cost Smart program, achieving over $170 million in savings. These savings are expected to improve margins and support strategic investments without significantly increasing operating expenses.
- Strength in Texture and Healthful Solutions Segment: The company remains bullish on the prospects of its Texture and Healthful Solutions segment, having doubled specialty starch capacity in China and expanded capacity in Thailand and Mexico. Despite some margin compression due to higher inventory costs, the segment is seeing a volume uptick and is expected to benefit from normalizing costs and increased customer demand.
- Management expresses caution on future volume recovery due to factors like customer pricing strategies, geopolitical risks, and supply chain disruptions, which could impact unit volume demand and profitability.
- Cost savings from the Cost2Compete program will largely accrue in 2025, with only a meaningful amount realized in 2024, potentially delaying margin improvements and not providing immediate support to earnings.
- The Texture and Healthful Solutions segment experienced margin compression due to carrying over higher-cost inventory into the new year and is also absorbing costs from capacity expansions, indicating continued pressure on profitability in this segment.