Sweet sodas and diet desserts alike get their taste from Ingredion's ingredients. The company makes food ingredients and industrial products from corn and other starch-based raw materials. It serve 60 markets, including food, beverage, brewing, and pharmaceutical companies. About 40% of sales come from sweeteners, including high-fructose corn syrup, which has been used by beverage makers and food companies, to sweeten their products. Ingredion gets a lot more out of kernel, also producing 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. Most sales are in North America.
Ingredion organizes its operations geographically. To this end, its business segments include North America, South America, Asia Pacific, and EMEA. It also breaks out segments by type of output. Starch products account for 44% of revenue, followed by sweetener products, 40%, and other products, 16%.
Ingredion has 43 manufacturing plants as well as R&D and sales offices in more than 40 countries. The company serves customers in more than 60 markets in more than 100 countries.
North America (Canada, Mexico, and the US) is Ingredion's largest market, accounting for about 60% of the firm's 2015 sales. South America contributes about 18% of sales, followed by the Asia Pacific region (13%), and Europe, the Middle East, and Africa (9%).
Sales and Marketing
Ingredion exploits the versatility of corn in supplying a range of customers, including the food, beverage, brewing, pharmaceutical, paper and corrugated products, textile and personal care industries, as well as the global animal feed and corn oil markets. Ingredion sells its products through its own sales force directly to manufacturers and distributors.
Ingredion reported continuous growth in revenues until 2012 followed by a 3% decline in 2013 and a 10% drop in 2014. Revenue stabilized somewhat in 2015, declining about 1% at $5.62 billion. The company blamed slower sales on foreign currency issues due to the strong US dollar. Sales in North America increased 8% with contribution from acquisitions. But a 2% decrease came from a lower price-product mix and another 2% from the weak Canadian dollar. Those problems were exacerbated outside North America by weaker foreign currencies.
The company posted a profit of $402 million in 2015, a 13% increase, with lower prices for raw materials.
Cash provided by operations decreased 6% to $686 million in 2015 because of margin account activity related to hedging contracts and the timing of payments.
Beyond acquisitions, Ingredion is also growing organically, broadening its ingredient portfolio and geographic coverage. 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.
In 2014 Ingredion entered an agreement with Alliance Grain Traders (AGT) to be AGT's distributor of that company's pulse flours, protein and bran ingredients, a move that complements three of Ingredion's growth platforms - wholesome ingredients, texturizers, and nutritional ingredients.
In 2015, to reduce costs the company began to consolidate its Brazil manufacturing operations by closing plants in Trombudo Central and Conchal and moving production to plants in Balsa Nova and Mogi Guaçu.
In Canada, Ingredion sold manufacturing capacity in Port Colborne, Ontario, Canada for $35 million in cash to focus on its higher-value specialty ingredient product portfolio.
The company had $280 million in capital expenditures in 2015, much of it going to upgrades and improvements at manufacturing facilities. Its capital expenditures were $276 million in 2014 and it expects an increase to about $300 million in 2016.
Mergers and Acquisitions
Ingredion in March 2015 acquired 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 was valued at around $340 million and extended Ingredion's core offerings and geographical footprint; Penford has offices and plants in Colorado, Idaho, Iowa, Pennsylvania, South Carolina, Washington, and Wisconsin.
Ingredion also closed the acquisition of Kerr Concentrates Inc., producer of natural fruit and vegetable concentrates, in 2015. The deal adds a range of wholesome ingredients for its texture and sweetener lines.
In 2016, Ingredion agreed to to a deal to increase its manufacturing capacity in China. It is acquiring the state-owned Shandong Huanong Specialty Corn Development Co. in Shandong Province.