Sweet sodas and diet desserts alike get their taste from Ingredion's ingredients. The company (formerly Corn Products International) makes food ingredients and industrial products from corn and other starch-based raw materials. Its customers include food, beverage, brewing, and pharmaceutical companies. More than 40% of sales come from sweeteners, including high-fructose corn syrup, which is used by just about every beverage maker and a good many food companies, to sweeten their products. Ingredion also produces corn starch (a thickener for processed foods), corn oil, and corn gluten (for animal feed). Ingredion operates manufacturing plants throughout Africa, Asia, Europe, and North and South America.
North America (Canada, Mexico, and the US) is Ingredion's largest market, accounting for more than half of the firm's $6.8 billion in 2012 sales. South America contributes about 22% of sales, followed by the Asia Pacific region (13%), and Europe, the Middle East and Africa (8%).
Ingredion organizes its operations geographically. To this end, its business segments include North America, South America, Asia Pacific, and EMEA.
Net sales for Ingredion rose 5% in fiscal 2012 as compared to 2011. Despite logging unfavorable currency translation due to weaker foreign currencies relative to the US dollar, Ingredion net sales increased during the reporting period. Net sales rose 6% due to improved price/product mix and volume growth increased 2% driven by stronger demand for the company's beverage, brewing, and food customers. Ingredion saw sales grow in North America (which accounted for 57% of revenue) and Asia Pacific (13%), offsetting declines in South America (22% of sales) and EMEA (8%). Net income for 2012 vs. 2011 increased 3%, in line with net sales increases while selling, general, and administrative expenses (due to higher compensation-related costs, lower integration expenses, and the impact of weaker foreign currencies) conspired to offset these gains.
Ingredion's sales increased by more than 42% in 2011 vs. 2010, while net income grew by 146% over the same period. The double-digit sales gain was driven by a 22% increase in volume sales attributed to the acquisition of National Starch (in 2010). The company's starch products business has increased from about 20% of sales a decade ago to 36% in 2011. Sweetener products still contribute more than 40% of Ingredion's total sales. Ingredion's 2011 sales also got a boost from higher prices for its other products. The robust growth in 2011 followed a sales increase of about 19% and jump in net income of more than 300% in 2010 vs. the year earlier period. The $1.3 billion acquisition of New Jersey-based National Starch extended the company's global reach and product portfolio.
Mergers and Acquisitions
In fall 2014, Ingredion agreed to acquire Iowa-based Penford Corp., a maker of carbohydrate-based specialty starches used by the paper, packaging, and food industries, for $19 per share in cash. The deal, which could close by the end of the year, is valued at $340 million.
The purchase of National Starch from the Netherland's Akzo Nobel in the fourth quarter of 2010 extended the company's reach into Asia -- giving it access to Chinese food businesses -- and added higher-margin processed items, and provided a platform for growth in Europe. The addition of National Starch, gave Ingredion more than 35 manufacturing sites in 15 countries.
Beyond acquisitions, Ingredion is also growing organically. Outside North America, the company's second-largest market is South America. To support its growth there, the company is investing up to $100 million to expand its operations in Brazil -- its biggest market in the region. Ingredion currently operates about a half a dozen manufacturing plants and two ingredient development facilities there.
The purchase of National Starch reduced Ingredion's reliance on sweetener products. Besides being a key ingredient in processed foods, starches have a wide range of industrial uses. Ingredion's sweeteners are used as sugar substitutes in everything from soft drinks and beer, to confections and canned foods. Taking advantage of a recent development in artificial-sweeteners, as well as customer demand for lower-calorie products, Ingredion jumped on the stevia bandwagon. It gained the global marketing and distribution rights to a stevia-based sweetener developed by Japanese company, Morita Kagaku Kogyo in 2008. Products made from the stevia plant have been found to be 400 times sweeter than cane sugar. Nutritional supplements containing stevia have a GRAS (generally regarded as safe) status with the USDA and may be used and sold in the US. The Ingredion/Morita sweetener is called Enliten.
The name change from Corn Products International to Ingredion in mid-2012 followed the company's purchase of National Starch and is meant to showcase its role as a global ingredients supplier.