Corn Products '09 Guidance Hit By Volume, Forex; 4Q Net Up
02 Février 2009 - 4:17PM
Dow Jones News
Corn Products International Inc. (CPO) warned Monday that 2009
profits may be up to a third less than analysts' expectations as it
digests falling volumes and currency devaluations.
The U.S. company is one of the world's largest corn refiners and
after a two-year boom is being hit by what its top executive called
a "collapsed" corn market.
Sam Scott, chairman and chief executive, said on an earnings
conference call that the immediate outlook for pricing power was
"bleak" but expressed confidence that the market would rebound,
allowing it to recoup foreign exchange losses within two years.
Its shares were down 8.2% at $21.20 in recent trading.
Corn Products boosted its 2008 profit guidance three times last
year as it raised prices to pass on soaring corn costs.
The slide in global commodity prices and economic slowdown has
crimped demand and created what Scott described as "uncertainty
over volumes and pricing."
"We've had a corn market, or a commodity market, that's pretty
much collapsed," said Scott.
The company has been hit by reduced demand from soft drinks
companies for its corn-based fructose syrup, as well as the
difficulties in a U.S. ethanol sector that had pushed farmers to
boost corn supply.
Net income in the fourth quarter to Dec. 31 rose to $46.4
million, or 61 cents a share, from $46.1 million, or 61 cents a
share, a year earlier. Analysts surveyed by Thomson Reuters had
expected earnings of 63 cents a share.
Fourth-quarter sales were up 1% at $900 million.
The final-quarter performance lifted full-year earnings to $3.52
a share, and the company said earnings per share for 2009 were
expected to be in the range of $2.10 to $2.60, versus a $3.14 mean
estimate by analysts, according to Thomson Reuters.
The fall in commodity prices has seen share prices across the
agribusiness sector tumble since last summer, pressurizing some of
the mergers and acquisitions agreed on earlier in the year.
Corn Products broke off its merger with Bunge Ltd. (BG) last
November. The total cost of the move, including breakup fees, was
$16 million.
Scott also confirmed that the search for his successor was
ongoing, with both internal and external candidates under
review.
He said there was no specific time scale for the search, adding
that he would "stick around" for as long as was necessary.
Bunge reports earnings Thursday, preceded by Archer Daniels
Midland Co. (ADM) on Tuesday.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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