Ingredion(US:INGR)2024-02-06 18:12Financial Data and Key Metrics Changes - For the full year 2023, net sales increased by 3% to $8.2 billion, marking an all-time high, while adjusted operating income rose by 23% to $969 million, also a record high [5][8][53] - Adjusted EPS grew to $9.42, which is 26% higher than the previous year [8] - Gross profit margin improved by 260 basis points to 21.4%, marking the sixth consecutive quarter of gross margin growth [18][53] Business Line Data and Key Metrics Changes - Specialty ingredients net sales grew by 4%, contributing to gross margin expansion, representing 34% of consolidated net sales by the end of 2023 [15] - Texture products experienced a drop in orders during the middle quarters of 2023, but a gradual increase in order volumes was noted towards the end of the year [10][15] Market Data and Key Metrics Changes - Sales volume decreased by 7% in Q4, but this was an improvement compared to Q3 as customers worked through destocking [20] - South America growth was driven by favorable foreign exchange impacts and strong performance in the Argentina joint venture, although Q4 results lagged by one month [19] Company Strategy and Development Direction - The company is focused on enhancing its go-to-market capabilities through global training and consultative selling, particularly in healthful solutions like sugar reduction and protein fortification [45][107] - A new operational structure was announced to better align resources and capabilities with customer needs, particularly in the Texture and Healthful Solutions segments [66][107] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in capturing incremental volume opportunities in 2024, anticipating a gradual improvement in order volumes [65][96] - The company expects net sales to be flat to up low-single-digits in 2024, with adjusted operating income anticipated to grow mid-single-digits [27][28] Other Important Information - The company achieved a perfect score in the Human Rights Campaign Foundation's Corporate Equality Index for 2023 and was recognized on Fortune's Most Admired Companies list [7] - Cash from operations for the year exceeded $1 billion, contributing to a positive return for shareholders with a 15% total shareholder return [49][24] Q&A Session Summary Question: What is the company's view on share repurchase and M&A? - The company maintains a disciplined approach to capital allocation, prioritizing organic growth investments, dividends, and M&A opportunities [38][39] Question: How is the company hedging raw material costs for 2024? - The company is hedged for approximately 80% of gross corn purchases and about 50% of co-product values, with expectations of lower corn costs impacting margins positively [40][72] Question: What are the expectations for volume demand in 2024? - The company anticipates a mid-single-digit increase in sales volume demand for 2024, with growth expected across all geographies except Europe in the first quarter [99][98] Question: How will the divestiture of the South Korea business impact financials? - The South Korea business contributed approximately $325 million in net sales for 2023, and its absence will be factored into the 2024 outlook [124][109] Question: What are the trends in customer reformulation? - There is a focus on affordability and wellness trends, with expectations for increased innovation in food service and product reformulation as consumer spending stabilizes [138][117]