Dive Brief:
- Ingredion reported a 52% jump in net income to $127.2 million, or $1.77 per share, compared to $83.7 million, or $1.17 per share in its first quarter. Net income in North America soared 46%.
- Quarterly revenue saw a 2% uptick to $1.36 billion, which included an 11% increase in North America sales.
- Ingredion attributed growth in the quarter to "improved price/mix in North America and South America, a more favorable product mix in both specialty and core ingredients, as well as acquisition-related growth," Food Business News reported.
Dive Insight:
Oganic volumes fell 2%, but Ingredion offset that dip with 4% volume growth from its Penford and Kerr acquisitions. These acquisitions opened Ingredion's portfolio to categories like potato starch and berries, both of which align with current consumer health trends. Potato starch has become a go-to ingredient for gluten-free product manufacturers. Berries offer antioxidants and other health benefits that snack makers have used in snack bars and better-for-you chocolate treats.
Ingredion competitor ADM reported declines in earnings almost across the board in its last earnings report in February, due to softer top lines, unfavorable market conditions, and currency headwinds. Analysts predict those challenges will continue for ADM this year. The company will report first-quarter earnings Tuesday.
However, like Ingredion, ADM offset some of its shortcomings via gains from acquisitions, including Eatem Foods announced in October, a California tree nut and seed processing facility announced last June, and WILD Flavors, which the company continues to expand.
As segments like corn and soybeans become issues for ingredients companies, Ingredion, ADM, and competitors will look beyond current portfolios for potential acquisitions in fast-growing markets.