Ingredion Incorporated (NYSE:INGR) Q3 2019 Earnings Conference Call - Final Transcript

Oct 31, 2019 • 08:00 am ET

Previous

Ingredion Incorporated (NYSE:INGR) Q3 2019 Earnings Conference Call - Final Transcript

Share
Close

Loading Event

Loading Transcript

Q & A
Executive
Jim Gray

-- hopefully as the US-China trade dispute unwinds, and there is more of a rebalancing of how soy ships out of the US, and we see some values for our corn co-products returns, that is a benefit that -- not just to us but our customers as well.

Executive
Ryan Koller

Okay. Thank you very much.

Executive
Jim Zallie

Thanks, Rob.

Executive
Jim Gray

Thank you.

Operator
Operator

Thank you. And our next question comes from the line of Ken Zaslow with Bank of Montreal.

Analyst
Ken Zaslow

Hey. Good morning, guys.

Executive
Jim Zallie

Hi, Ken.

Analyst
Ken Zaslow

Can you frame how much the US-China and Japan-Korea trade issues have depressed 2019 operating profit?

Executive
Jim Gray

For Asia-Pac?

Executive
Jim Zallie

For Asia-Pac regions?

Analyst
Ken Zaslow

Oh, no, for the whole company. For -- the US-China first, is kind of the bigger one I think. And then you mentioned Korea-Japan. But -- I just want -- not just for APAC, but just for the company. Just so if there was a resolution, what would return and what wouldn't return, how to think about it I guess is kind of the framework on that. I think that's kind of where I'm looking to go.

Executive
Jim Zallie

Yes. I think we understand clearly your question. And Jim and I are discussing it here. It's actually a very good question because I think what we should do first is just breakdown for every one the components of that. So US-China trade dispute obviously impacts the soy complex and the impact on co-products and network costs. And then equally, you have an increase in tariffs on imports going into China. You have a depression related to the economies in northern Asia. You have trade disputes between Japan and Korea, as well as between the US and China. And we're seeing some macro economic impacts there. So Jim I'm going to turn over to you to try to help quantify the perimeters around that.

Executive
Jim Gray

Yes. I mean I think, Ken, as we look to impact in the North America business from '18 into '19 in terms of the co-product values that we think have not been passed through, that's probably in excess of $20 million impact to the region. On the flip side, when we look at our Asia-Pac business, clearly, what we're seeing in China is, as you have a higher tariff on the imported goods that's raising our need to try and price, it's a competitive market in China, lots of customers and a couple of local options. And so I would say that that is putting some pressure on China. And then, probably more of an impact for us has really been Korea. And the Korea -- with the Korea won showing some weakness, the producers in Korea buy corn off of the world market. That increases the transactional cost of that corn.

And with the economy slow, it's very difficult to price through, the demand isn't there. So I mean I would probably say that Asia-Pac impact, if I look kind of year-over-year, it's struggling excess of $10 million.

Executive
Jim Zallie

Yes.

Executive
Jim Gray

Right, combined.

Analyst
Ken Zaslow

Great. And then my -- just