INGR - Ingredion: COGS Lagging Fallen Input Prices

2024-05-12 22:46:59 ET

Summary

• Ingredion is lapping quarters where companies were still overstocking. So destocking is in effect and muting margins.
• Cold weather effects mattered for the North American segment volumes, while in LatAm, there was a bit of underperformance due to a Colombian customer.
• Margins are under pressure because the end market pricing is deflating as many of the key inputs have seen precipitous declines like corn.
• Margins should improve once higher-costed inventories liquidate, and volumes are still at healthy absolute levels.
• Capacity investments and continued operational improvement plans keep Ingredion on the right track, and it looks about fairly valued.

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