BMO Capital Markets 2008 Agriculture and Protein Conference

Transcription

1 Presentation to BMO Capital Markets 2008 Agriculture and Protein Conference May 15, 2008 Cheryl K. Beebe Vice President and CFO David A. Prichard Vice President, Investor Relations

2 Forward-Looking Statement This presentation contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of The Company intends these forward looking statements to be covered by the safe harbor provisions for such statements. These statements include, among other things, any predictions regarding the Company s future financial condition, earnings, revenues, expenses or other financial items, any statements concerning the Company s prospects or future operation, including management s plans or strategies and objectives therefor and any assumptions underlying the foregoing. These statements can sometimes be identified by the use of forward looking words such as may, should, will, anticipate, believe, plan, project, estimate, expect, intend, continue, pro forma, forecast or other similar expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to or incorporated by reference into this report are forward-looking statements. These statements are subject to certain inherent risks and uncertainties. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, stockholders are cautioned that no assurance can be given that our expectations will prove correct. Actual results and developments may differ materially from the expectations conveyed in these statements, based on various factors, including fluctuations in worldwide markets for corn and other commodities, and the associated risks of hedging against such fluctuations; fluctuations in aggregate industry supply and market demand; general political, economic, business, market and weather conditions in the various geographic regions and countries in which we manufacture and/or sell our products; fluctuations in the value of local currencies, energy costs and availability, freight and shipping costs, and changes in regulatory controls regarding quotas, tariffs, duties, taxes and income tax rates; operating difficulties; our ability to effectively integrate acquired businesses; labor disputes; genetic and biotechnology issues; changing consumption preferences and trends; increased competitive and/or customer pressure in the corn-refining industry; the outbreak or continuation of hostilities including acts of terrorism; and stock market fluctuation and volatility. Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these risks factors, see the Company s most recently filed Annual Report on Form 10-K for the year ended December 31, 2007 and subsequent reports on Forms 10-Q or 8-K. 2

3 Pure-Play Starch Refiner/Ingredients Company Leading global provider of refined, agriculturally based products and ingredients Primary raw materials: corn/other starch-based materials No. 1 worldwide dextrose producer Regional leader in starch, high fructose corn syrup and glucose Major in-country capacity shares typical ex-us Solid balance sheet and strong cash flow generation 3

4 Pure-Play Starch Refiner/Ingredients Company Sweeteners Dextrose Glucose corn syrups Maltose High fructose corn syrup Fermentation products Starches Industrial starches Process food starches Fermentation products Co-products Corn gluten feed Corn gluten meal Corn oil 4

5 End User Products Customers in About 60 Diverse Industries/70 Countries Food Industrial Fine Chemicals/ Sweeteners Starches Starches Pharmaceuticals Carbonated beverages Cereals Paper IV Dextrose Beer Soups Corrugated boxes Tableting excipients Sports drinks Sauces Textiles Fermentation feedstocks Frozen desserts Drink mixes Adhesives Canned fruits and vegetables Pudding Baby and face powders Drink mixes Cakes Rubber Presweetened cereals Cookies Leather Breads Crackers Detergents Fruit juices Jams and jellies Chewing gum Cream filling Syrups Candy 5

6 Sales by Product Category & Markets Served 60% 50% 55% 54% 52% 53% 55% 57% 40% 30% 20% 10% 0% 25% 25% 26% 24% 23% 21% 21% 22% 23% 22% 22% 20% Sweeteners Starches Co-Products & Other Processed Foods Industry, 25% Other, 37% Soft Drink Industry, 16% Brewing Industry, 11% Animal Feed, 11% 6

7 Geographic Installed-Capacity Leadership Strong and Unique Global Position Producing: 15 countries**,*** 35 plants**,*** Marketing: 70 countries North America 3 United States 4 Canada, Mexico 1 South America 1 Argentina, Brazil, Chile, Colombia, Peru, Venezuela ** Asia/Africa South Korea, Thailand, Pakistan, China***, Kenya South Africa** * Share of production capacity **Technical License Agreements ***Joint Venture Rank* Top Tier or 1 Source: Corn Products International Competitive Intelligence Process 7

8 Positive Drivers/Strategic Focus Favorable Global Trends Rising populations & GDP rates Improving standard of living Per capita income growth Preference for improved diet Personal/health care awareness Our Operating Approach Strategize globally execute locally Leverage core competencies Delivered cost leadership in local markets Anticipate/satisfy changing customer and consumer needs Become even closer to customer 8

9 Core Capabilities A Building Platform Strong Americas position Managing geographic breadth Cultural understanding Performance in difficult environments Reputation/assets/infrastructure Managing alliance relationships 9

10 South America Region Historic Strength Presence of nearly 80 years Full territory coverage Historically outperformed each nation s underlying GDP Successfully dealt with currencies, economies Most advanced ingredient region in CPO HFCS only in Argentina Andean Region Colombia Venezuela Peru Southern Cone Argentina Chile Uruguay Paraguay/Bolivia Brazil 1 corn refining plant 1 tapioca plant 2 tolling facilities 1 plant (TLA) 1 plant 2 plants 1 plant Distribution warehouse Sales agents 3 corn refining plants 1 tapioca plant 1 adhesive & caramel color plant 1 polyol plant Ingredient Technology Center Venezuela Colombia Ecuador Peru Chile Brazil Uruguay Argentina 10

11 Asia/Africa Region Expansion Focus Decades of operations in various countries Geographic growth opportunities Significant capacity shares Favorable market drivers Multi-national customers migrating production here Asian Region South Korea Thailand 2 corn refining plants 1 tapioca plant South Korea China Pakistan Thailand Malaysia Pakistan Regional marketing office 2 corn refining plants Kenya Malaysia China 1 corn refining plant (JV) India Rep office African Region Kenya 1 plant South Africa South Africa 4 plants (TLA) 11

12 North America Region Margin Growth 100 years old in the US Improving industry fundamentals High capacity utilization rates Industry rationalization/plant closures Ethanol demand growing Higher US, Canadian contract pricing Mexico leadership Open border as of January 1, 2008 HFCS beverage usage tax eliminated Only North American corn refiner with full-scale sweetener and starch facilities in all 3 NAFTA countries unique position Canada United States Mexico Canada Mexico United States 3 plants 3 plants 5 plants 12

13 Mission and Pathways To be the Premier Regional Provider of Refined, Agriculturally Based Products and Ingredients Worldwide 1. Excel at the Base Business 2. Selectively Drive Organic Growth in the Base Business 3. Expand Value- Added Product Portfolio Through Multi- Geographic Alliances and Acquisitions 4. Grow Defensible Businesses in New High-Growth Regions 5. Be an Ingredients Supplier

14 Product Platforms and Target Markets Food Beverage Markets Industrial Health & Personal Care Animal Nutrition Platforms Sweeteners Starches New Ingredients Strategic Accounts & Geographies Mission: To be the Premier Regional Provider of Refined, Agriculturally Based Products and Ingredients Worldwide 14

15 Key Financial Targets: Year EPS Growth Target Low Double-Digit Return on Capital Employed (ROCE) 8.5% to 10+% Total Debt/EBITDA < 2.25x Debt/Capitalization 32% to 35% Operating Working Capital 8% to 10% of Net Sales See Appendix slides for GAAP reconciliation for the non-gaap Targets 15

16 Management/Shareholder Alignment Enhancing shareholder value Officers average nearly 20 years of experience Executive compensation aligned with shareholders Short-term EPS/Operating Income 80% Operating Cash Flow 20% Management variable compensation Annual Incentive Plan EPS/Operating Income 60% Individual 20% Working Capital/ROCE 20% Long-term Shareholder return 50% Return on capital employed (ROCE) 50% Direct stock ownership targets for officers Significant inside ownership 16

17 2008 Outlook Raising diluted EPS growth expectations to 12 to 22 percent, or $2.90 to $3.15, versus a record $2.59 in 2007, which included the 5-cent gain from our holdings in CME Group Prior 2008 EPS guidance was $2.65 to $ EPS range translates into 5-year CAGR of 22 to 24 percent Solid EPS growth in the last three quarters expected in a range of $2.05 to $2.30 versus $1.93 in comparable 2007 period, which included the 5-cent gain from our holdings in CME Group Expect stronger first half EPS growth versus second half Anticipate return on capital employed (ROCE) to comfortably exceed our 8.5% minimum target for second consecutive year Net sales should reach $4 billion versus $3.4 billion in 2007 Business model should continue to function well in unprecedented and volatile global commodity cost environment Challenges and opportunities include volume and supply chain costs 17

18 2008 Outlook by Region North America profit improvement a primary driver in higher 2008 EPS outlook Pricing for entire US/Canada book of business in 2008, including all types of contracts, has increased in low double-digit range Excellent results expected again in South America Growth in Brazil should be very strong Improvement seen in the Southern Cone Weaker results anticipated for Asia/Africa Sharply lower operating income in South Korea Volume shortfalls and corn/ocean freight rate cost pressures continue Aggressively working to improve results Pakistan and Thailand should lead growth in the rest of the region 18

19 Pathway Strategy Growth Overview Estimated Cap-X of $200 million includes attractive base business growth projects Healthy balance sheet and strong cash flow foster pursuit of global growth opportunities Three strategic focus areas: Increase base corn-refining business in fast-growing international markets (grind and/or finishing channel expansions in progress in six countries, with new modified starch capacity being added in Mexico) Expand into new geographies Develop larger business in the higher-margin, broad-based ingredient category through internal development, JVs and acquisitions (specialty polyols capacity expansions in the US, Mexico and Brazil) 19

20 Enliten High-Intensity, Low-Calorie Sweetener Expanding sweeteners platform and specialty ingredients portfolio with new, naturally occurring sweetener Derived from the stevia plant Marketed under the brand name Enliten Aimed at satisfying consumer demand for low-calorie sweetener that tastes good Long-term agreement with Morita Kagaku Kogyo of Japan Exclusive license for patented stevia strain, manufacturing technology and stevia production Global marketing and distribution rights $20 million project to build stevia plant in Brazil by year-end 2009 Designed to meet expected growth in customer demand Contract farmers in Brazil have been growing stevia plant for Corn Products for about a year Enliten to be marketed in Latin American/Asian countries where approval is in place Regulatory clearance to be pursued in the US with Europe under evaluation Enliten scale-up not expected to contribute significantly to near-term revenues Laying more groundwork for longer-term, profitable growth Stevia-based sweetener initiative fits value-added ingredients portfolio strategy 20

21 Financial Review 21

22 ($ millions, except per share amounts) Summary Income Statement Quarter Ended March Change Net sales $931 $762 22% Gross profit % Gross margin 18.6% 19.2% Operating income % Operating margin 11.5% 11.5% Net income % Diluted earnings per share $0.85 $ % Effective tax rate 33.5% 34.0% 22

23 Summary Income Statement 12 Months Ended March 31 ($ millions, except per share amounts) Change Net sales $3,560 $2,768 29% Gross profit % Gross margin 17.2% 17.0% Operating income % Operating margin 10.3% 9.6% Net income % Diluted earnings per share $2.78 $ % 23

24 Key Metrics Quarter Ended March 31 ($ millions) Debt to total capital 23.6% 26.3% Debt to EBITDA (TTM) Operating working capital $492 $308 (excluding short-term debt, cash and deferred tax) % of 12-month sales 13.8% 11.1% Net debt (debt less cash) $414 $471 24

25 Diluted EPS and Operating Margin* $3.50 $3.00 $2.50 Expect diluted EPS in a range of $2.90 to $3.15 $2.00 $1.50 $1.00 $0.50 $ % 8.3% 7.8% 7.8% 8.6% 10.2% Outlook Diluted EPS Operating Margin *Adjusted for 2-for-1 stock split effective January 25,

26 Cap-X and D&A ($ millions) $180 $160 $140 $120 $100 $80 $60 $40 $20 $ Cap-X D&A 2008 Cap-X Budget is Approximately $200 Million 26

27 Cash Flow and Total Debt Cash Flow from Operations ($ millions) Leverage $300 $ % $250 $ % $200 $ % 25.0% $400 $ % $300 $ % $ % $50 $ % $ $ % Cash Flow Net Income Total Debt Debt to Total Capital 27

28 Dividend History* $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ Annual Cash Dividend Paid Per Common Share Annual Diluted EPS *Adjusted for 2-for-1 stock split effective January 25,

29 Shareholder Value Proposition Low Cost Modern plants Favorable locations Worldwide network Global cost optimization Strategic Strengths Single focus starch refining Clear long-term strategy Specific growth pathways Mgmt/shareholder alignment ATTRACTIVE GROWTH PROFILE Leading Positions Diverse geographies Product/customer breadth Valuable alliances High barriers to entry Organizational Depth Experienced management Focused workforce Technical & market expertise Financial Flexibility Strong balance sheet Solid cash generation Low maintenance cap-x Investment grade ratings 29

30 30

31 Appendix 31

32 Management Profiles Samuel C. Scott III Chairman, President and Chief Executive Officer Samuel Scott, 63, has served as chairman and chief executive officer since Previously, Scott was the president and chief operating officer of the Company. He held various positions with CPC International Inc. since 1973, including vice president of sales for Corn Products, executive vice president, and president of CPC s worldwide corn-refining business. He also held positions with Citibank and United Technologies Norden Division. Scott serves on the board of Motorola, Inc., where he is lead director and chairman of the compensation committee. He also serves on the board of directors of Abbott Laboratories and The Bank of New York Mellon Corporation. In addition, he sits on the boards of ACCION International, INROADS Chicago and The Chicago Council on Foreign Relations. He is a trustee of The Conference Board. Scott received a bachelor s degree in engineering and a master s degree in business administration from Fairleigh Dickinson University in New Jersey. Cheryl K. Beebe Vice President and Chief Financial Officer Cheryl Beebe, 52, was appointed vice president and chief financial officer in Prior to this position, she served as the vice president of finance and corporate treasurer of the Company. Beebe has held various positions of increasing responsibility in marketing, market services, audit, finance and treasury functions, since joining CPC International Inc. in She has a bachelor s degree in accounting from Rutgers University in New Jersey, and a master s degree of business administration in corporate finance from Fairleigh Dickinson University in New Jersey. 32

33 Corn Wet Milling Process 33

34 34 Ingredient Applications Wines & Brewing Textiles Syrups & Sweeteners Pharmaceuticals Personal Care Pastes & Adhesives Paper, Corrugated & Related Mixes & Prepared Foods Miscellaneous Industry Miscellaneous Foods Mining/Metallurgy Meat Products Jams, Jellies & Preserves Ice Cream & Frozen Desserts Formulated Dairy Products Fats & Oils Confectionery, Gum & Cough Drops Condiments Chemicals Cereals Canners & Packers Building Materials Beverages & Soft Drinks Animal Feeds & Pet Foods Ingredient Applications Modified Starch Unmodified Starch Dextrin Maltodextrin Glucose/Corn Syrup Dextrose HFCS Corn Oil Gluten Feed Gluten Meal Germ Meal Steepwater scfos

35 ($ millions) Key Target GAAP Reconciliation Return on Capital Employed at December 31 Return on Capital Employed Total stockholders equity* $1,330 $1,210 Add: Cumulative translation adjustment* Minority interest in subsidiaries* Redeemable common stock* Share-based payments subject to redemption* 4 - Total debt* Less: Cash and cash equivalents* (131) (116) Capital employed* (a) $2,034 $1,925 Operating income $347 $224 Adjusted for: Income taxes (at effective tax rates of 33.5% in 2007 and 35.3% in 2006) (116) (79) Adjusted operating income, net of tax (b) $231 $145 Return on Capital Employed (b a) 11.4% 7.5% * Balance sheet items used in computing capital employed represent beginning of period balances 35

36 Key Target GAAP Reconciliation Debt to Total Capital at December 31 ($ millions) Debt to Capitalization percentage Short-term debt $130 $74 Long-term debt Total debt (a) $649 $554 Deferred income tax liabilities $133 $121 Minority interest in subsidiaries Redeemable common stock Share-based payments subject to redemption 9 4 Stockholders equity 1,605 1,330 Total capital $1,787 $1,518 Total debt and capital (b) $2,436 $2,072 Debt to Capitalization percentage (a b) 26.6% 26.7% 36

37 Key Target GAAP Reconciliation Debt to EBITDA Ratio at December 31 ($ millions) Debt to EBITDA ratio Short-term debt $130 $74 Long-term debt Total debt (a) $649 $554 Net income $198 $124 Add back: Minority interest in earnings 5 4 Provision for income taxes Interest expense, net Depreciation EBITDA (b) $468 $339 Debt to EBITDA ratio (a b)

38 Key Target GAAP Reconciliation Operating Working Capital as % of Net Sales ($ millions) Operating Working Capital as a percentage of Net Sales Current assets $1,089 $837 Less: Cash and cash equivalents (175) (131) Less: Deferred income tax assets (13) (16) Adjusted current assets $901 $690 Current liabilities $664 $517 Less: Short-term debt (130) (74) Less: Deferred income tax liabilities (28) (14) Adjusted current liabilities $506 $429 Operating working capital (a) $395 $261 Net sales for the last 12 months (b) $3,391 $2,621 Operating Working Capital as a percentage of Net Sales (a b) 11.6% 10.0% 38

39 Geographic Segments Annual Net Sales/Operating Income 2001 through 2007 ($ millions) Net sales North America 2,052 1,588 1,422 1,419 1,329 1,219 1,212 South America Asia/Africa Total 3,391 2,621 2,360 2,283 2,102 1,871 1,887 Segment operating income* North America South America Asia/Africa Total operating income *Geographic segments only 39

40 Net Sales Top Six Countries Year Ended: ($ millions) United States $ 1,021 $ 770 $ 710 $ 765 $ 738 $ 605 $ 599 Mexico Canada Sub Total $2,052 $ 1,588 $ 1,422 $ 1,419 $ 1,329 $ 1,218 $ 1,213 Brazil $ 498 $ 350 $ 322 $ 288 $ 251 $ 195 $ 200 Korea Argentina Others Total $ 3,391 $ 2,621 $ 2,360 $ 2,283 $ 2,102 $ 1,871 $ 1,887 40

41 Long-Lived Assets Top Six Countries as of December 31: ($ millions) United States $ 506 $ 466 $ 428 $ 407 $ 406 $ 433 $ 434 Mexico Canada Sub Total $ 1,064 $ 985 $ 986 $ 981 $ 997 $ 1,013 $ 1,042 Brazil $ 320 $ 219 $ 160 $ 125 $ 112 $ 88 $ 131 Korea Argentina Others Total $ 2,013 $ 1,807 $ 1,701 $ 1,641 $ 1,608 $ 1,524 $ 1,652 41

42 Percent of Net Sales Starch 22% 22% 23% 22% 21% 20% 20% Sweeteners 57% 55% 53% 52% 54% 55% 57% Co-products & other 21% 23% 24% 26% 25% 25% 23% Major Industries Processed foods 25% 19% 19% 22% 21% 21% 22% Soft drink 16% 18% 18% 17% 17% 17% 20% Brewing 11% 11% Animal feed 11% 10% 11% 19% 19% 16% 15% 42

43 ($ millions) Summary Balance Sheet 2007, 2006 and Current assets $ 1,089 $ 837 $ 685 Net fixed assets 1,500 1,356 1,274 Other assets Total assets $ 3,103 $ 2,645 $ 2,389 Current liabilities* $ 544 $ 443 $ 367 Total debt Other liabilities Redeemable equity Stockholders' equity 1,605 1,330 1,210 Total liabilities and equity $ 3,103 $ 2,645 $ 2,389 *Excludes short-term debt 43

44 ($ millions) Summary Cash Flow 2007, 2006 and Cash flow from operations $ 258 $ 230 $ 245 Net income Depreciation Working capital (increase)/decrease (59) (29) 60 Other (6) 21 (11) Cash flow from investing $ (232) $ (210) $ (141) Fixed assets, net (174) (168) (136) Acquisition (59) (42) (5) Sale of investment Other Cash flow from financing $ 15 $ (6) $ (91) Net increase (decrease) in debt (44) Dividends paid (33) (26) (22) Issuance (Repurchase) of common, net (39) (2) (25) Excess tax benefit on share-based compensation Other (2)

45 ($ millions) EBIT EBITDA Interest Expense, Net Total Debt Book Capital Market Capitalization Creditworthiness Improvement $ ,436 3, $ ,072 3, (b) (a) $ 180 $ 178 $ 174 $ ,912 1,877 1,802 1,710 2,465 2,794 2,146 2,013 EBITDA Interest Coverage 12.2x 12.0x 8.9x 8.5x 7.1x 6.9x EBIT Interest Coverage 9.0x 8.0x 5.6x 5.4x 4.5x 4.2x Total Debt/EBITDA 1.4x 1.6x 1.8x 2.0x 2.0x 2.3x Total Debt/Book Capitalization (c) Total Debt/Market Capitalization 27% 18% 27% 17% 28% 30% 31% 35% 21% 20% 26% 30% Subsidiary Debt as a % of Total Debt 23% 18% 14% 20% 18% 25% (a) Includes unusual items of $8 million pre-tax or $5 million after-tax. (b) Includes net charges of $21 million pre-tax and $15 million after-tax. (c) Market capital assumes year-end share prices 45

46 Historical Update North America 1997 to 2003 Driven by Mexican HFCS Situation 1997 Large Mexican HFCS market border closed to US exports Result: US overcapacity utilization: 90s% low 70s% * Corn Products locally produced HFCS in Mexico Strong results through and 1999 US Recovery underway 2000 Detour 2001 to present US corn refiners environment Major structural change among US corn refiners Grind capacity utilization: 90s% * - Ethanol demand: more than doubled Finishing capacity utilization improved * 2002 & 2003 Corn Products US/Canada results increased substantially Mexico levies 20% tax on HFCS-sweetened soft drinks *Source: Corn Products Competitive Intelligence Process 46

47 Historical Update North America Competitive arena*: US HFCS processor company changes Coors ProGold MCP Cerestar Cargill 1997 Gone Cargill ADM 30% Shuts ½ Dayton 2000 CPMCP 2002 ADM Cargill 2004 Idles Dimmitt, TX** 2005 Idles Decatur, AL*** 2006 Restarts Decatur, AL November 2000: 7 HFCS producers 3 with 17% of capacity March 2002 thru present: 4 HFCS producers with 97% of capacity *Source: Corn Products International Competitive Intelligence Process **Source: Associated Press, August 17, 2004 ; ***Source: Decatur Daily, October 4,

48 Historical Update North America 1997 to 2003 Driven by Mexican HFCS Situation 1997 Large Mexican HFCS market border closed to US exports Result: US overcapacity utilization: 90s% low 70s% * CPO s locally produced HFCS in Mexico Strong results through and 1999 US Recovery underway 2000 Detour 2001 to present US corn refiners environment Major structural change among U.S. corn refiners Grind capacity utilization: 90s% * - Ethanol demand: more than doubled Finishing capacity utilization improved * 2002 & 2003 CPO US/Canada Operating Income increased substantially Mexico 20% tax on HFCS-sweetened soft drinks Except for ethanol No expansions since 1997* *Source: Corn Products Competitive Intelligence Process 48

49 1.Excel at the Base Business How Our Strategic Pathways Link to Creating Shareholder Value 2.Selectively Drive Organic Growth in the Base Business Better the Business Grow the Business 3. Expand Valueadded Product Portfolio Through Multi- Geographic Alliances and Acquisitions Reposition CPO 4. Grow Defensible Businesses in New Highgrowth Regions 5. Be an ingredients supplier Excel at The Base Business Organic Growth Alliances Acquisitions Geographic Expansion Ingredient Company 49

50 Our Approach Ingredient Positioning Specialization Specialty Ingredients Product/service differentiation Line extensions Success as ingredient supplier Basic Ingredients No product differentiation Commodity-oriented pricing Advances Quality, timeliness, reliability Ingredient supplier approach Geographic growth High Value Specialty Ingredients IP-based differentiation Alliances Acquisitions New ingredient commercialization High Value Ingredients Product differentiation Internal source Line extensions New ingredient commercialization External source Acquisitions Alliances Value 50

51 South America Ingredients BASIC INGREDIENTS High Maltose Syrup Regular Starch Glucose Corn Syrup HFCS Liquid Dextrose Syrup Blends SPECIAL INGREDIENTS Food Modified Starches Industrial Modified Starches Dried Blends Crystalline Dextrose Dried Syrups Maltodextrine Sorbitol, Mannitol, Liquid Maltitol Fructooligosaccharide Caramel Color Adhesives & Dextrines Fats & Emulsifiers Refined Corn Oil Raw Materials: ANIMAL NUTRITION & HEALTH Gluten Feed Gluten Meal Other, Basic & Special Ingredients Regular and Waxy Corn, Tapioca, Wheat & Soy Flour, Sucrose 51

52 Net Sales & Operating Income/Margins South America Net Sales ($ Millions) $1,000 Operating Income ($ Millions) 200 $ $ $600 $400 $ % $401 $ % $ % $ % $ % 12.4% $ % $ Net Sales Operating Income 52

53 North America Ingredients BASIC INGREDIENTS HFCS Corn Starch Corn Syrup Liquid Dextrose Blends SPECIAL INGREDIENTS Refined Corn Oil Crystalline Dextrose Modified Starches Maltodextrine Sorbitol Fructooligosaccharide Caramel Color ANIMAL NUTRITION & HEALTH Gluten Feed Gluten Meal Other 53

54 Net Sales and Operating Income/Margins North America Net Sales ($ millions) $2,200 $2,000 $1,800 $2,052 Operating Income ($ millions) $1,600 $1,400 $1,200 $1,000 $1,212 $1,219 $1,329 $1,419 $1,422 $1, % $800 $600 $ % 4.6% 5.1% 6.1% 4.2% 8.2% $200 $ Net Sales Operating Income 54

55 Asia/Africa Ingredients BASIC INGREDIENTS Corn Starch Corn Syrup HFCS Tapioca Starch Tapioca Syrup Dextrose SPECIAL INGREDIENTS Refined Corn Oil Modified Textile starch Modified Paper Starch High Maltose Syrup Dextrines Tapioca Oxidized Starch Tapioca Maltodextrine Oligosaccharides ANIMAL NUTRITION & HEALTH Gluten Feed Gluten Meal Other 55

56 Net Sales & Operating Income/Margins Asia/Africa Net Sales ($ Millions) $450 Operating Income ($ Millions) 120 $400 $350 $300 $308 $335 $363 $ $250 $200 $150 $ % $ % $ % 15.6% 15.8% 14.6% 10.9% $100 $50 20 $ Net Sales Operating Income 56

57 Food starches - Specialties Specialty Ingredients Examples of Progress Variety of raw materials: corn dent and waxy; tapioca; blends Applications: sauces, mayonnaise, dressings, frozen desserts, yogurt, beverages, flavors Types: Cross-bonded and Pregelatinized, OSA, HPS and CSW starches Expandex TM modified tapioca starch for gluten intolerance market Industrial starches Ecopolymers for plastic replacement Casein-based adhesive for labeling Pregelatinized starch for mining and tissue Acetylated thin-boiling waxy starch for paper coating Health and personal care OSA aluminum and calcium for creams Cationic starch for softener Sorbitol for tooth paste and tableting and mannitol pharma and food grades 57

58 Corn Basic Structure and Approximate Yield* Kernel Structure Hull Fiber Starch Protein Germ Approximate Yield Starch 68% Gluten Feed 19% Gluten Meal 5% Germ Corn oil 4% Germ meal 3% *Note: These are only approximations due to our use of varieties of hybrids throughout our world 58