Ingredion Incorporated Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Performance: Adjusted operating income was $273 million, highest Q2 in company history. Adjusted operating income up 1% for Q2 and 12% for H1 2025.
• Segment Specifics: Texture & Healthful Solutions had 3% sales volume growth, clean label solutions saw double-digit growth. Food & Industrial Ingredients LATAM impacted by macroeconomic factors. Chicago plant mechanical issue affected U.S./Canada segment.
• Strategic Pillars: Business Growth (Texture & Healthful Solutions strong performance, LATAM diversifying, U.S./Canada expanding Cedar Rapids plant). Cost Competitiveness (exceeding $50 million cost savings target, digital transformation improving customer experience). People-Centric Culture (15th sustainability report, Forbes Net Zero leader, Mexico's 100th anniversary).

Segment Performance

• Texture & Healthful Solutions: Net sales increased by 2%, operating income rose 29%. Sales volume grew 3%, driven by clean label solutions and customized formulations. Contributed significantly to overall performance.
• Food & Industrial Ingredients LATAM: Net sales declined 5%, primarily due to reduced brewing volumes, macroeconomic impacts, and foreign exchange weakness.
• Food & Industrial Ingredients U.S./Canada: Net sales fell 6% due to a mechanical fire at the Chicago plant, lower industrial starch sales, and corrugated box demand weakness.
• All Other Group: Net sales increased 10% driven by protein fortification and sugar reduction businesses.

Guidance

• Full Year 2025: Net sales flat to slightly up. Adjusted operating income mid-single digits growth. Adjusted EPS range raised to $11.10 to $11.60. Capital investment $400 million to $425 million.
• Segment Specifics: Texture & Healthful Solutions operating income growth low double digits. F&I LATAM net sales flat to down low single digits, operating income up low single digits. F&I U.S./Canada operating income down low single digits due to Q2 disruption. Q3 net sales flat to up low single digits, operating income flat to down low single digits (lapping strong prior year quarter).

Risks

• Tariffs: Uncertainty around tariffs impacting industrial starch sales and customer production schedules.
• Macroeconomic Factors: LATAM macroeconomic challenges (slower growth, higher interest rates) affecting volumes.
• Indirect Impacts: Potential indirect impacts on customers due to tariffs, affecting demand for products.

Question and Answer

Q: Kristen Owen on EPS guide and offsets A: Jim Gray and Jim Zallie discuss cautious outlook due to tariff uncertainties, lapping strong prior year Q3, and momentum in Texture & Healthful Solutions.

Q: Ben Theurer on Texture & Healthful Solutions second half sales A: Jim Gray and Jim Zallie discuss price/mix, volume, and FX impacts, expecting flattish to tailwind price/mix and continued volume growth.

Q: Ben Mayhew on cane sugar vs HFCS and Pakistan asset A: Jim Zallie states no noticeable impact on HFCS demand, and Jim Gray mentions Pakistan asset sale process is ongoing.

Q: Pooran Sharma on Texture & Healthful margins and industrial starch A: Jim Zallie and Jim Gray discuss margin stability, continued mix improvement, and industrial starch market outlook.

Q: James Cannon on Argentina piece in LATAM A: Jim Gray discusses Argentina JV performance, stabilization of inflation and peso, leading to more normal expected results.

Q: Heather Jones on THS outlook and tariffs A: Jim Zallie and Jim Gray discuss cautiousness around tariffs, adapting to new ground rules, and long-term margin expectations.