WESTCHESTER, ILL. — Capped by strong fourth-quarter results, Ingredion Inc. posted double-digit gains in 2024 earnings despite a drop in revenues, associated with lower raw material costs. Cautious guidance issued by the company for 2025 results drew the attention of investment analysts,  and Ingredion’s share price fell after the financial results and guidance were released.

“We delivered record Q4 financial results driven by continued strong sales volume growth in Texture and Healthful Solutions and exceptional results in our Food and Industrial Ingredients (F&II) US/CAN and LATAM segments,” said James P.  Zallie, president and chief executive officer. “Our 2024 reorganization and new segment structure positioned our teams well toward targeted market and customer opportunities establishing a solid foundation for future growth.”

In late 2023, Ingredion announced plans to restructure from a company organized by regions (North America, South America, Asia-Pacific and EMEA (Europe, Middle East, and Africa)), to one organized by production assets —  texture and healthful solutions as well as food and industrial ingredients. The company’s line of starches, sweeteners, co-products, corn oil and specialty ingredients fall between the two segments.

“Our F&II US/CAN business benefited from the renewal of multi-year customer contracts that enabled us to recapture inflationary impacts and recover margins, resulting in significant operating income growth in the fourth quarter,” Zallie said. “For F&II LATAM, the Mexico and Andean businesses delivered strong results despite softer sweetener demand. The strength and agility of our business model in the region enabled us to manage pricing in the face of changing corn costs and currency fluctuations.”

Ingredion income in 2024 was $647 million, equal to $9.88 per share on the common stock, up slightly from $643 million, or $9.74, in fiscal 2023. Net sales were $7.43 billion, down 9% from $8.16 billion. Results during 2024 included $127 million in restructuring charges, up from $11 million a year earlier. Adjusted earnings jumped 13%.

Operating income of the Texture & Healthful Solutions division was $350 million, down 11% from $394 million in 2023. Sales were $2.37 billion, down 4%.

Food & Industrial Ingredients for the United States and Canada had operating income of $373 million, up 25% from $298 million the year before. Sales were $2.16 billion, down 8%. For Food & Industrial Ingredients in Latin America, operating income was $483 million, up 7% from 2023. Sales were $2.45 billion, down 7%.

“Our Food and Industrial Ingredients US/Canada business benefited from the renewal of multi-year contracts that enabled us to recapture inflationary impacts and recover margins, resulting in significant operating income growth for the fourth quarter,” Zallie said.

The Latin American businesses in Mexico and the Andean region “delivered strong results despite softer sweetener demand,” he said.

 “With Texture and Healthful Solutions, we experienced a double-digit sales volume increase for the second consecutive quarter,” Zallie said of fourth-quarter results. “Food and beverage categories in the US, such as yogurt, beverages, and batters and breadings, were key contributors to this growth.”

Zallie cited challenges in Western European markets, including ongoing food inflation, but said categories “most relevant to Ingredion” did better than the overall food market overall last year.

“Sectors such as dressings, ready-to-eat and frozen meals, and dairy products continue to demonstrate recovery as consumers traveled and returned to more in-office work routines and placed an increased emphasis on value,” he said.

For the company’s Food and Industrial business in North America, Ingredion benefited from strong demand from papermaking and packaging customers, but weaker sweetener shipments were a drag, Zallie said. He said gross margins jumped 270 basis points during the year, reaching 24%.

While expressing concerns about the geopolitical climate, and the possibilities of a trade war, James Gray, executive vice president and chief financial officer, said Ingredion benefits from local manufacturing in each of it markets.

“For example, we’re the only corn wet miller in Canada with two manufacturing facilities, and in Mexico with three manufacturing facilities that supply predominantly a local customer base,” he said. “We source corn locally in each country, although we do rely on corn imports from the US into Mexico. So that’s one of the things that obviously we’ll be watching.”

For 2025, Ingredion projected adjusted earnings per share of $10.75 to $11.55, which would be up 0.9% to up 8%. The company said it anticipated net sales to be up low single digits, “reflecting greater volume demand, partially offset by price mix and foreign exchange impacts.”

Zallie offered a hopeful view of Ingredion’s positioning going into 2025, particularly because of better-than-anticipated savings generated by the company’s Cost2Compete cost-cutting program.

“We anticipate the further strengthening of customer collaborations to drive growth and the benefits of the second year of Cost2Compete initiatives to position us well to navigate the business environment in 2025,” he said.

Still, nearly all the analysts participating in the call asked management about the earnings guidance with the first expressing surprise at the modest growth at the low end of the guidance range.

“When I think we’re beginning the year, we’re going to look at a range that's relatively wide,” Gray said, responding to the first questions. “I think early on, there’s also always going to be, well, which way is maybe the spring crop in the US going to kind of play out? As well as right now, I think this year, looking really at FX rates. So I think on the low side of our earnings estimate, probably greater currency weakness could play into facts in Brazil, Colombia, Europe, maybe China. I’d say there’s probably some offsets maybe in the weakness in the Thai baht, which is generally a benefit from us.”

He also cited softer co-product values in Europe and questions about prospects for the corn crop in France.

“And then just generally slightly higher corn costs potentially always can be just a slight headwind even though we extensively hedge,” he said.

After announcing financial results, Ingredion shares on Feb. 4 fell as much as 8% from the Feb. 3 closing price in trading on the New York Stock Exchange, ending the day at $127.13, down 6%.