Ingredient systems provider Penford Corp has reported net income of US$1.4m for its Q3 ended 31 May 2002, versus a net loss of US$0.6m year on year.

Last year's Q3 included a restructuring charge of US$0.02 per share. Q3 sales increased to US$59.1m from US$58.8m for the same period last year.

For the first nine months of FY 2002, Penford reported earnings of US$2.8m, compared to a net loss last year of US$1.2m. This year's nine-month results include US$0.11 per share of charges associated with the previously announced corporate restructuring. Last year's nine-month results included US$0.19 per share of non-recurring charges. Nine-month sales increased 2% to US$170.3m from US$166.5m for the same period in FY 2001.

Growth of Penford's food products in the US and the positive impact of the acquisition of Penford Australia in September 2000 offset nine-month sales volume declines from Penford's industrial products.

Thomas D. Malkoski, CEO of Penford, said, "We are pleased with the improvement of earnings over last year, however, the general soft demand in many of the primary markets we serve is holding back stronger revenue growth."

"Our industrial ingredients business had a much improved Q3 performance over a year ago aided by lower cost inputs and slightly stronger product demand. This is the first quarter in 2 1/2 years that our industrial group has shown year over year quarterly revenue growth," Malkoski said.

"Our US food ingredients group experienced lower demand for coating systems resulting in a revenue decrease for the Q3 compared to a year ago, but is still 9% ahead of last year's nine-month results. Our pipeline of new initiatives in the coatings and protein product categories should continue to provide a platform for growth as the markets we currently serve improve. Our Australian operations contributed to improved quarterly earnings over the year-earlier period, largely the result of improved cost performance," Malkoski said.

"Our overall cost structure for the year benefited from lower natural gas costs and

tightly managed operating expenses. In addition to cost controls in place, a strong focus on cash flow has led to significant year-to-date debt reductions and lower interest costs," Malkoski said.

"Penford's long-term growth depends on delivering technically differentiated starch-based ingredient solutions that bring enhanced functional benefits to our customers' products and processes.

"As the general economy improves, we expect to be able to capitalise on an array of growth opportunities for the company," Malkoski concluded.