Bedford Park, Ill.-based corn refiner Corn Products International (CPI) has reported fully diluted earnings per share (EPS) of US$0.52 for its Q2 ended 30 June, up from US$0.43 year on year.

Net sales were up slightly to US$486m from US$482m in the Q2 2001, and gross profit was posted at US$72m versus US$73m. Operating income was US$40m versus US$42m and net income was US$19m, up from US$15m year on year as financing costs and goodwill amortisation declined.

In the Q2 2002, CPI said that sales and operating income were affected by a volume reduction of high fructose corn syrup (HFCS) in Mexico caused by the slow resumption of sales, following the temporary suspension of a tax imposed on soft drinks sweetened with HFCS, and by the continuing economic problems in South America.

Decreased debt levels, coupled with lower interest rates, resulted in financing costs being reduced by more than 50% to US$7m in the Q2 from US$15m year on year. Goodwill amortisation was US$3m pretax in the Q2 2001. The effective tax rate is 36% versus 35% last year.

"Our business performed well in the second quarter this year, despite the HFCS situation in Mexico and economic problems in South America," said Sam Scott, chairman, president and CEO: "We were able to achieve solid net income for the Q2, increased cash flow and reduced debt. As a direct result of our focus on cash flow and debt reduction, we improved net income, despite relatively flat sales and volume."

Scott added: "The continuing performance improvement in the US, previously disclosed US cost reductions, progress in the southern cone of South America and strong performance in Asia, mitigated to some extent the reduction in HFCS sales to soft-drink bottlers in Mexico."

H1 2002

Through 30 June, fully diluted EPS was US$0.83, which included nonrecurring earnings of US$0.08 per fully diluted share. This compared with 2001 results of US$0.79 per fully diluted share.

H1 net sales were US$918m versus US$937m year on year, and gross profit was US$130m, down from US$148m. Operating income was US$72m versus US$82m and net income was US$30m, up from US$28m.

Business breakdown by region


Net sales were US$318m, up from US$317m (including US$5m in 2001 from the US enzyme operation that was sold in Q1 2002), reflecting higher volumes for all product lines throughout the region with the exception of HFCS sales in Mexico. Q2 operating income was US$17m, down 7% from the prior year as gains in the US could not overcome the decline in Mexico.

South America

Net sales of US$102m declined from US$104m due to currency and economic weakness in the region, while operating income dipped 3% to US$15m. Improved performance in the southern cone of South America partially offset the decline in Brazil caused by the economic slowdown in that country. Volume was up 2%.


Net sales were US$66m, up from US$62m and operating income rose 7% to US$14m. Volume rose 4.5%. As CPI's Asian strategy continues to deliver growth, the Division recorded another strong quarter. Net sales and operating income were boosted by higher volumes and favourable exchange rates.


CPI confirmed that its outlook for 2002 is expected to be at or near 2001 results. "Until there is a permanent resolution of the Mexican value-added tax (VAT) on soft drinks sweetened with HFCS, we expect no HFCS sales to the soft drink industry there," Scott said. "And, although interest costs in the H2 will be up over the H1, we anticipate they will be significantly better than last year."

Scott concluded: "Although the Mexican VAT has been resumed, we believe that the problem will be resolved by the US and Mexico. We also believe that we have positioned CPI to be on solid ground when a resolution ultimately occurs. Our debt at US$680m is substantially below last year's US$756m, and we expect further reduction in the H2. We plan to continue our company-wide focus on activities to improve cash generation and to reduce costs.

"Finally, in terms of income growth, we look forward to ongoing strong performance in Asia, as well as continuing improvement in the US and the southern cone of South America."