About Ingredion Incorporated
Sweet sodas and diet desserts alike get their taste and feel from Ingredion's ingredients. The company makes food ingredients and industrial products from corn and other starch-based raw materials. It serves customers in more than 60 markets, including food, brewing, and paper companies. Ingredion's largest product line is starches, used in food for stabilization, feel, and texture and in paper, packaging, and other materials for quality, strength, and a host of other attributes. Its other product lines include sweeteners (high-fructose corn syrup, dextrose), specialty ingredients (products focused on health, affordability, and sustainability), and co-products (refined corn oil, corn gluten feed and meal). Ingredion operates worldwide, but generates most of its sales in North America.
Cornstarch and other starch products account for about 45% of Ingredion's revenue and are used in processed foods, as well as in paper and packaging, adhesives, textiles, pharmaceuticals, make-up, and other products.
Sweeteners used in a wide range of foods -- from condiments to candy -- generate more than 35% of sales, with specialty ingredients designed to capitalize on consumer trends bringing in about a quarter. Sweeteners include glucose syrups, high maltose syrup, high fructose corn syrup, dextrose, polyols, maltrodextrin, glucose syrup solids, and non-GMO syrups.
The company's smallest product segment, co-products, includes refined corn oil sold to a variety of food producers and corn gluten feed and meal used for pet food. It also makes fruit and vegetable products, such as concentrates, purees, and essences. The segment accounts for about 15% of revenue.
Well-covered geographically, Ingredion serves customers in more than 60 countries worldwide. North America is its largest market, accounting for some 60% of sales. South America represents more than 15% of sales, the Asia Pacific region generates 15%, and EMEA (Europe, Middle East, and Africa) represents 10% of sales.
Ingredion has some 45 manufacturing plants in about a dozen countries (the US is home to about a third of them).
Sales and Marketing
Ingredion exploits the versatility of corn in supplying customers across some 60 industries. Food is the company's largest industry segment, generating about 55% of revenue, with the next biggest being the beverage (10%), animal nutrition (10%), and brewing (5%) industries.
Ingredion sells its products through its own sales force directly to manufacturers and distributors.
Ingredion has struggled to attain meaningful revenue growth over the last five years, up just 3% in total. Profits have been stable.
In 2018 revenue of $5.8 billion was unchanged from 2017. Volume growth of 1% and a favorable price/mix of 2% was offset by unfavorable currency movements. By geography, falls in Latin and North America were offset by increases in the Asia/Pacific region and EMEA.
Net income fell 15% to $443 million due to severance costs, higher shipping and handling expenses, and an increase in restructuring and impairment charges, partially offset by lower income taxes.
Ingredion's cash on hand fell $268 million during 2018, ending the year at $327 million. The company's operations generated $703 million, offset by $361 million used in its investing activities and $589 million used in its financing. Ingredion's main cash uses in 2018 were capital expenditures, share repurchases, and debt payments.
While America's appetite for corn syrup remains as strong as it is, Ingredion's strategy is mostly tinkering around the edges. It invests in its specialty business to meet new trends in the ingredients market, finds cheaper ways to carry out its regular activities, and seeks growth abroad. It is investing $60 million in operations in Thailand and China to expand its tapioca, waxy corn, and rice capabilities. Driven by demand for low-calorie sweeteners, Ingredion is building a new factory in Mexico to produce Allulose, a rare sugar that will allow manufacturers to reduce calories. And outside sweeteners, Ingredion is investing $140 million to grow its plant-based protein businesses amid rising global demand. To free up resources, Ingredion closed a corn syrup factory in Stockton, California.
Ingredion is also targeting a $125 million cost reduction by 2021. The savings should come mainly from lower input costs and lower selling, general, and administrative expenses.
Mergers and Acquisitions
Ingredion bought the rice starch and flour business of Thailand's Sun Flour Industries in 2017, which boosts the company's specialty ingredients segment.
In late 2016 it paid nearly $400 million for Maryland-based TIC Gums, which provides gums and resins to improve the texture of foods and beverages. The deal expands Ingredion's customer base and, again, adds to its specialty ingredients segment. Also that year the company acquired state-owned Shandong Huanong Specialty Corn Development Co. in China's Shandong Province to increase its manufacturing capacity in the country.
Ingredion in March 2015 acquired Iowa-based
5 Westbrook Corporate Ctr STE 500
Westchester, IL 60154-5795
Phone: 1 (708) 551-2600
Employer Type: Publicly Owned
Stock Symbol: INGR
Stock Exchange: , NYSE
Chairman: Ilene S. Gordon
EVP and CFO: James D. Gray
President, CEO, and Director: James P. Zallie
Employees (This Location): 800
Employees (All Locations): 11,000
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