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| Statement |
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| The layout of corn will present lower corn costs through the year and support margin expansion for the balance of the year |
| We have increased our sales to $8.2 billion which is an all-time high |
| For the full year, we increased our net sales 3% and our adjusted operating income by 23% as we managed raw material volatility and took pricing actions and proactive cost saving measures |
| As we look ahead to 2024, we are well-positioned to deliver further financial growth on top of 2023's remarkably strong results, and are confident that our new segmentation will better align our resources and capabilities with customers' needs to realize further growth opportunities |
| Beginning with specialty ingredients, full year net sales grew by 4% and specialty growth contributed to gross margin expansion |
| Performance highlights included food systems, driven by strong private label demand and pharma and personal care, driven by continued wellness trends, each demonstrating strong topline growth for 2023 |
| Some of the things we talked about in relationship to our net promoter scores, the service enhancements, the benefits in procurement that we're getting, the safety results, that operational excellence focus on a global basis with benchmarking best practice is serving us very well |
| And so, when we see adjusted operating income up in the mid-single-digits, essentially what we're counting on is a return on actual volume is going to be offset by a little bit of price pass through due to lower raw materials, but we're seeing dramatically lower corn costs and some input costs, and so the lower COGS is helping us |
| This net change impacted our ending balance sheet favorably, resulting in a recovery of working capital, which contributed positively to our cash from operations |
| So, I would say that it's, I don't know if it's necessarily changing our guidance, but we are very confident that December pause, there's still an underlying customer order volume demand, and that's coming through in January |
| That $55 million total is in the 23% increase in operating income last year, and we believe that that has been taken to a low point, where we're seeing improvements heading into this year |
| By giving our teams the tools and information they need to help customers innovate around these trends in real time, we have been able to improve our net promoter scores, something that we regularly track |
| Adding to this, our investment in supply chain systems have improved on-time delivery each quarter as we progressed through 2023, giving our customers confidence that our supply chain can support just-in-time demand |
| The team has done an outstanding job of leveraging Ingredion scale and implementing best practices |
| We are beginning to see significant value creation through real year-over-year savings, risk reduction and improved supplier collaborations |
| I also want to emphasize the outstanding work that our operations team has done to ensure the safety of our employees and contractors this year |
| We anticipate as lower corn costs work through Q2 through Q4 that net margins will continue to improve |
| Our supply chain and operations teams responded quickly by adjusting production schedules, which enabled us to end the year with a well-balanced inventory level |
| As we absorb greater fixed costs in 2023, we feel that we are well-positioned in 2024 as volumes recover to obtain leverage from our operations and lower manufacturing costs |
| We delivered a record year in 2023 with strong profit growth and year-over-year gross margin expansion, and we generated record cash from operations of over $1 billion and we invested prudently in our strategic priorities |
| I'm proud to report that we earned a perfect score in the Human Rights Campaign Foundation's Corporate Equality Index for 2023 |
| We are also happy to announce that we were once again recognized on Fortune's Most Admired Companies list, ranking in the top five of the food production category |
| The attractiveness of high fructose syrup to beverage makers is very, very good |
| So, we'll have good underlying OI |
| Our business performed exceptionally well in 2023, surpassing several key financial records with solid net sales, very strong profitability and robust cash flow, as well as outstanding Company performance across safety, environmental and importantly, service delivery |
| Ingredion, for the longest time, has been very regionally organized, and that has served us very well from a standpoint of regional accountability for P&Ls and delivering results |
| During 2023, we improved gross profit margins by 260 basis points to 21.4%, which demonstrates that our pricing actions and proactive cost savings initiatives have absorbed the inflation of the last three years |
| Further in 2024, a good solid year for sugar reduction |
| It's worth noting that this is the 6th consecutive quarter of gross margin growth |
| We believe that the customer inventory correction that started back in the first quarter of 2023 has largely run its course, and we are well-positioned to capture incremental volume opportunities as they arise in 2024 |
| Statement |
|---|
| Sales volume was down 8% as order volume was slower as customers destocked inventories built up over the last several years |
| While net sales of approximately $2 billion were down 3% for the quarter versus prior year |
| For adjusted operating income, we anticipate a double-digit decline of minus 25% to minus 35%, driven by three factors: First, we are running with less volume in production than first quarter last year |
| As I highlighted previously, the fourth quarter sales volume headwinds were most evident in EMEA and North America, both regions experiencing a December pause in orders as new contracts and lower pricing levels became effective in January |
| In the middle quarters of 2023, we experienced a drop in orders as customers drew down inventories, primarily in our texture products |
| As 2023 developed, we experienced softer customer demand |
| In December, order volumes slowed, representing two-thirds of the fourth quarter's sales volume decline as customers anticipated lower prices in their contracts beginning in January |
| Reported operating income was lower than adjusted operating income, primarily due to impairments on minority equity or venture investments |
| And overall, as we guided, net sales will be flat to up low-single-digits as we expect some price mix headwinds with lower corn costs being passed through on our variable pricing contracts |
| For the first quarter of 2024, we expect net sales to be down modestly with a mid-single-digit decline versus the first quarter of 2023, which reflects lower pricing as corn costs are passed through, as well as a relatively challenging lap from the prior year in EMEA due to extraordinary pricing to catch up with energy and input cost inflation |
| But within 2024, look, there are some risks to the year |
| I would note that just on one thing, which is within our 2023 results, we're still absorbing a loss on plant based proteins |
| I'd also say though and just highlight that the M&A landscape has been one where it's been, I think, a little bit challenging in the last 2023, maybe part of 2022, at least for private equity, as risk free rates rose |
| Foreign exchange was a minus 1% headwind for the full year as the impact in EMEA, mainly in Pakistan, and various currencies in Asia Pacific were only partially offset by South America |
| The decrease of 18% for South America was driven by lower corn prices resulting from Brazil's larger harvest |
| I would just say that when you look at the layout of corn, you had a declining corn futures market in 2023 |
| And so, that operating loss was just over $40 million |
| The layout for margin change across 2024 will be highlighted by lower margin in the first quarter, as we have set prices in anticipation of full year corn cost layout, and are carrying into quarter one higher corn value as realized hedges work through COGS |
| The 3% decrease in net sales was driven by $148 million in lower volumes, partially offset by price mix of $63 million along with a positive foreign exchange impact of [$19 million] (ph) |
| But I'm just trying to make sure I'm thinking about kind of fixed cost absorption and how the impact of volumes, what negative impact that had in 2023 as you managed through destocking and a high-single-digit decline in organic volumes |
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