presentation to deutsche bank investor tour brazil...
TRANSCRIPT
Presentation toDeutsche Bank Investor Tour
Brazil Food Products March 5, 2007
Jorge L. FiamenghiVice President and President,
South America Division
David A. PrichardDirector, 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 1934. 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; boiler reliability; 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; stock market fluctuation and volatility; and our ability to maintain sales levels of HFCS in Mexico. 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, 2006 and subsequent reports on Forms 10-Q or 8-K.
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
4
Pure-Play Starch Refiner/Ingredients Company
SweetenersDextroseGlucoseMaltoseHigh fructose corn syrupFermentation products
StarchesIndustrial starchesProcess food starchesFermentation products
Co-productsCorn gluten feed Corn gluten mealCorn oil
corn syrups
5
End User Products
Customers in ~60 Diverse Industries/70 CountriesFood Industrial Fine Chemicals/
Sweeteners Starches Starches PharmaceuticalsCarbonated beverages Cereals Paper IV DextroseBeer Soups Corrugated boxes Tableting excipientsSports drinks Sauces Textiles Fermentation feedstocksFrozen desserts Drink mixes AdhesivesCanned fruits and vegetables Pudding Baby and face powdersDrink mixes Cakes RubberPresweetened cereals Cookies LeatherBreads Crackers DetergentsFruit juicesJams and jelliesChewing gumCream fillingSyrupsCandy
6
Sales by Product Category & Markets Served
55%
20%
25%
54%
21%
25%
52%
22%
26%
53%
23%
24%
55%
22%
23%
0%
10%
20%
30%
40%
50%
60%
2002 2003 2004 2005 2006
Sweeteners
Starches
Co-Products &Other
Other, 42%
Animal Feed, 10%Brewing Industry, 11%
Soft Drink Industry, 18%
Processed Food Industry, 19%
7
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
Strong Global PositionProducing: 15 countries**,*** 35 plants**,***Marketing: 70 countries
North America 3United States 4Canada, Mexico 1
South America 1Argentina, Brazil, Chile, Colombia, Peru, Venezuela**
Asia/AfricaSouth Korea, Thailand, Pakistan, China***, KenyaSouth Africa**
*Share of production capacity**Technical License Agreements***Joint Venture
Geographic Installed-Capacity Leadership
Top Tier or 1
Rank*
Source: Corn Products International Competitive Intelligence Process
9
Core Capabilities
• Americas position
• Managing geographic breadth
– Cultural understanding
– Performance in “difficult” environments
• Reputation/assets/infrastructure
• Managing alliance relationships
10
Mission and Pathways
2003 2008
1. Excel at the Base Business
5. Be anIngredients Supplier
4. Grow Defensible Businesses in New High-Growth Regions3. Expand Value-
Added Product Portfolio Through Multi-Geographic Alliances and Acquisitions
2. Selectively Drive Organic Growth in the Base Business
To be the Premier Regional Provider of Refined, Agriculturally Based Products and Ingredients Worldwide
11
How Our Strategic Pathways Link to Creating Shareholder Value
1.Excel at the Base Business
2.Selectively Drive Organic Growth in the Base Business
2003 2008
5. Be an ingredients supplier
4. Grow Defensible Businesses in New High-growth Regions
3. Expand Value-added Product Portfolio Through Multi-Geographic Alliances and Acquisitions
Better the Business
Grow the Business
Reposition CPO
Excel at
The
Base
Business
Organic
Growth
Alliances
Acquisitions
Geographic
Expansion
Ingredient
Company
12
Key Financial Targets: 2003-2008
5-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
13
Management Focus
• Enhancing shareholder value– Officers average nearly 20 years of experience
• Executive compensation aligned with shareholders
• Management variable compensation
• Direct stock ownership targets for officers• Significant inside ownership
Short-term– EPS/Operating Income 80%– Operating Cash Flow 20%
Long-term– Shareholder return 50%– Return on capital employed (ROCE) 50%
Annual Incentive Plan– EPS/Operating Income 60%– Individual 20%– Working Capital/ROCE 20%
14
2007 Outlook
• Expect 13 to 23 percent increase in 2007 diluted EPS, or $1.84 to $2.01, versus a record $1.63 in 2006
• 2007 EPS range should keep CPO on track for low double-digit EPS growth target for 2003-2008
• Net sales increase should be healthy
• Anticipate improved ROCE and progress on goal to meet/exceed cost of capital
• Planned Cap-X of about $145 million reflects promising investment opportunities in support of our growth and profit targets – Continued selective investment in base business– Countries include Argentina, Mexico, Colombia, Pakistan and Thailand
15
Focus on South America
16
External Environment
• Growing population• Developing region – opportunities• Economic environment
– Growth – agriculture and industry– Employment recovering– Per-capita income improving– Foreign investments – at lower risk
• Inflation – current outlook appears manageable• Currencies – relatively stable
17
External Environment (cont’d.)
• Raw materials– Adequate supplies currently and in future
• Corn, manioc and sucrose
• Energy– Natural gas and fuel costs – expected to be manageable– Major countries self-sufficient – Long-term supply commitments for Brazil
• Sugar as raw material – Brazilian Getec polyols business– Abundant and low-cost
• Sugar as competitive ingredient– Argentina, Colombia, Chile – highly protected; social and political– CPO impact:
• Southern Cone – our only HFCS market – demand/offer in balance• Andean region and Brazil – no HFCS business
18
External Environment (cont’d.)
• International competitors– Brazil-based operations
• Cargill• National Starch• Avebe• D.D. Williamson
– Offshore exporters• Staley• ADM• Roquette• Sethness
• Domestic competitors– Argentina
• Arcor• Ledesma• Glutal
– Brazil• Manioc processors
19
Historical Context
• CPO has 79 years of performance• Strong leadership: ~70% share of installed capacity*• Full territory coverage• Infrastructure and reputation in place• Leading low-cost, high-quality ingredients supplier• Diversified portfolio – ingredients and services• Well-positioned to participate in region’s growth
*Source: Corn Products Competitive Surveillance Process
20
• Andean Region– Colombia
• 1 corn refining plant• 1 tapioca plant• 2 tolling facilities
– Venezuela 1 plant (TLA)– Peru 1 plant
• Southern Cone– Argentina 2 plants– Chile 1 plant– Uruguay Distribution warehouse– Paraguay Sales agent– Bolivia Sales agent
• Brazil– 3 corn refining plants– 1 tapioca plant– 1 adhesive & caramel color plant– 1 polyols plant – Ingredient Technology Center
Corn Products South America
21
South America Ingredients
BASIC INGREDIENTS
High Maltose Syrup Regular StarchGlucose Corn SyrupHFCSLiquid DextroseSyrup Blends
SPECIAL INGREDIENTS
• Food Modified Starches• Industrial Mod. Starches• Dried Blends• Crystalline Dextrose• Dried Syrups• Maltodextrine• Sorbitol, Mannitol, Liquid
Maltitol• Fructooligosaccharide• Caramel Color• Adhesives & Dextrines• Fats & Emulsifiers• Refined Corn Oil
ANIMAL NUTRITION & HEALTH
• Gluten Feed• Gluten Meal• Other, Basic & Special
Ingredients
Raw Materials:
Regular and Waxy Corn, Tapioca, Wheat & Soy Flour, Sucrose
22
Inspiration
“Every day, in every home,at least one of our ingredients is to be used
to make the quality of life better”
23
Specialty Ingredients Examples of Progress
• Food starches - Specialties– 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
• ExpandexTM 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
24
Net Sales and Operating Income/MarginsSouth America – 2001-2006
$440$401
$495
$556$603
$670
$0
$200
$400
$600
$800
2001 2002 2003 2004 2005 20060
20
40
60
80
100
120
140
160
180
200
Net Sales Operating Income
Net Sales($ millions)
Operating Income($ millions)
16.7%
17.6% 16.8%
12.5%
14.5%15.5%
25
Net Sales South America – 2001-2006
200 195
251288
322350
140 144 143163 167
191
10063
102 106 114 129
440401
495
556
670
603
$0
$50
$100
$150
$200
$250
$300
$350
$400
2001 2002 2003 2004 2005 2006$0
$100
$200
$300
$400
$500
$600
$700
$800
Brazil Other Argentina Total SA
($ millions)
26
$667
$559$521
$468$489
$360
$0
$200
$400
$600
$800
2001 2002 2003 2004 2005 2006
($ millions)
Total AssetsSouth America – 2001-2006
27
ConchalConchal--SPSPTapioca MillingTapioca Milling
JundiaJundiaíí--SPSPCaramel Color/Vegetable AdhesivesCaramel Color/Vegetable Adhesives
CaboCabo--PEPECorn Wet MillingCorn Wet Milling
MogiMogi GuaGuaççuu--SPSPCorn Wet MillingCorn Wet Milling
Balsa NovaBalsa Nova--PRPRCorn Wet MillingCorn Wet Milling
AlcantaraAlcantara--RJRJGetec PolyolsGetec Polyols
Brazil Products and Plant Locations
Primary Products– Adhesives– Anhydrous dextrose– Caramel color– Corn oil– Dextrin– Glucose– Glucose solids– Gluten feed– High maltose syrup– Liquid dextrose– Unmodified and modified starch– Maltodextrin– Oligosaccharides– Sorbitol, mannitol– Tapioca starch
28
South America Strategic Focus
2003 2008
1. Excel at the Base Business
5. Be an ingredients supplier
4. Grow Defensible Businesses in New High-growth Regions3. Expand Value-
added Product Portfolio Through Multi-Geographic Alliances and Acquisitions
2. Selectively Drive Organic Growth in the Base Business
29
Strategic Overview
• Corn Products in the region is well-advanced as an ingredient supplier– Recognized by customers/markets served– Providing differentiated services and efficient solutions
• Tailor-made ingredient specs• Developing enhanced formulations• People expertise
– Strategically allied to key local customers– Broad portfolio
30
Strategic Overview
Working through the pathways, recent past & present:
• Excel at the base business
– Rationalizing production and supply in Southern Cone
– Consolidating facilities in Andean region
– Improving channels take-away in Brazil
– Maximizing working capital initiative
• Cost & efficiencies – throughout South America
– Strengthening standards of quality, environment and safety
– Strong margins (average OI% for any 3-year period about 16%)
31
Strategic Overview
Working through the pathways, recent past and present:(Cont’d.)
• Selectively grow the business
– Maintaining installed capacity leadership
– Focused on selected markets – reinforced presence
– Expanded ingredients application : processed food, dairy, household/personal care, and animal nutrition and health
– Growing on more added-value existing ingredients – continued lowering dependency on basic ingredients
32
Cap-X and D&ASouth America – 2001-2006
49
28
17 18 2023 25
48
313028
16
$0
$10
$20
$30
$40
$50
$60
2001 2002 2003 2004 2005 2006
Cap-X D&A
($ millions)
33
Strategic Overview
Working through the pathways, recent past and present:(Cont’d.)
• Leverage alliances and acquisitions – broadening portfolio
– Introduced GTC products throughout the region
– Developed alliances at country/regional basis for household/personal care, animal nutrition, bakery and textile segments:• Shared portfolio
• Improving services know-how
34
Strategic Overview
Working through the pathways, recent past and present:(Cont’d.)
• Be an ingredients supplier
– Established strategic relationship with top key customers– Sharing expertise for joint developments– Developed and invested in new variety of special starches – Expanding functional/nutraceuticals ingredients approach– Developing technical capabilities to enhance selected markets
penetration– Promoting seminars and workshops
35
Recent Strategic Acquisitions
• Purchase of remaining 50% of Getec polyols JV in Brazil in February 2007– Products include liquid sorbitol, mannitol and anhydrous dextrose– Serves personal care, food, candy and confectionary, and pharmaceutical markets– Combined sales with SPI Polyols food business in US are about $100 million annually– Formed in 1964 with initial CPO equity investment of 20% in 1997 and increase to
50% in 2006 • DEMSA acquisition in December 2006
– Peru’s only corn refiner established in 1964 and with annual sales of about $15 million
– Produces regular and modified corn starch, glucose, grits, corn oil, corn flour, hominy feed, caramel color and other products
– Serves food and beverage, papermaking, corrugated, pharmaceutical, textiles and animal feed markets
– Expected to help overall performance of Andean region• Both acquisitions enhance CPO’s historically strong market position and
extensive territory coverage in South America
36
Key Going-Forward Success Factors
• Investments underway to support growth strategy– Brazil, Argentina and Colombia grind expansions
• Underway – to be completed in 2007-08– New sorbitol facility started up in Andean area– 3 additional modified specialty ingredient channels for Brazil
• Completed in 2006• Product launch in progress
• Innovation and agile culture• Historic focus and accomplishment
– Meeting all the needs of our customers – Basic and specialty ingredients offerings– Providing return and growth
37
Q & A
38
39
Appendix
40
Management Profiles
Samuel C. Scott IIIChairman, President and Chief Executive Officer
Samuel Scott, 62, has served as chairman and chief executive officer since 2001. 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 The Bank of New York. In addition, he sits on the boards of ACCION USA, INROADS Chicago and The Chicago Council on Foreign Relations. He is also 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. BeebeVice President and Chief Financial Officer
Cheryl Beebe, 50, was appointed vice president and chief financial officer in 2004. Prior to this position, she served as the vice president of finance and corporate treasurerof 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 1980. She has a bachelor’s degree in accounting from Rutgers University in New Jersey, and a master’s degree of business administrationin corporate finance from Fairleigh Dickinson University in New Jersey.
41
Management Profiles (cont’d.)
Jorge L. FiamenghiVice President and President, South America Division
Jorge Fiamenghi, 51, has been vice president and president of the South America Division since 1999. Most recently, he was acting president, US/Canadian Region from August 2001 to February 2002. He has held many management positions throughout North and South America, including president and general manager of Corn Products Brazil from 1996-1999 and general manager for the CPC corn refining affiliate in Argentina starting in 1991. Fiamenghi joined CPC International in 1971. He holds a bachelor’s degree in economics from São Judas University and a post-graduate degree in business administration from Faculdade de Ciências Econômicas de São Paulo in Brazil.
42
Corn Wet Milling Process
43
Ingredient Applications
Ingredient ApplicationsAnimal Feeds & Pet Foods • • • • • • • • • • • • •Beverages & Soft Drinks • • • • •Building Materials • • • • • • •Canners & Packers • • • • • • • • •Cereals • • • • • • • • • •Chemicals • • • • • • • • • • •Condiments • • • • • • • •Confectionery, Gum & Cough Drops • • • • • • • • •Fats & Oils •
Formulated Dairy Products • • • • • • • • •Ice Cream & Frozen Desserts • • • • • • • • •Jams, Jellies & Preserves • • • • • • •Meat Products • • • • • • • •
Mining/Metallurgy • • • • •Miscellaneous Foods • • • • • • • • •Miscellaneous Industry • • • • • • • •Mixes & Prepared Foods • • • • • • • •Paper, Corrugated & Related • • •Pastes & Adhesives • • • •
Personal Care • • • • • • • •Pharmaceuticals • • • • • •Syrups & Sweeteners • • • • •Textiles • • • • • • •Wines & Brewing • • • • • • • •
Modified Starch
Unmodified Starch
DextrinMaltodextrin
Glucose/Corn Syrup
Dextrose
HFCS Corn Oil
Gluten Feed
Gluten Meal
Germ Meal
Steepwater
scFOS
44
Summary Income StatementYear Ended December 31
($ millions, except per share amounts)
2006 2005 Change
Net sales $2,621 $2,360 11%
Gross margins 15.9% 14.1%
Operating income 224 183 23%
Net income 124 90 38%
Diluted earnings per share $1.63 $1.19 37%
Effective tax rate 35.3% 37.5%
45
Key MetricsYear Ended December 31
($ millions)2006 2005
Return on capital employed 7.5% 6.0%
Debt to total capital 26.7% 27.6%
Debt to EBITDA 1.6 1.8 TTM EBITDA
Operating working capital $261 $190(excluding short-term debt, cash and deferred tax)
% of 12-month sales 10.0% 8.1%
Net debt (debt less cash) $423 $412
46
Diluted EPS and Operating Margin*
8.2% 8.3% 7.8% 7.8%8.6%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
2002 2003 2004 2005 2006 2007Outlook
Diluted EPS Operating Margin
Expect 13-23%increase
*Adjusted for 2-for-1 stock split effective January 25, 2005
47
$0$20$40$60$80
$100$120$140$160$180
2001 2002 2003 2004 2005 2006
Cap-XD&A
($ millions)
Cap-X and D&A
48
Cash Flow and Total Debt
Cash Flow from Operations
$0
$50
$100
$150
$200
$250
$300
2001 2002 2003 2004 2005 2006
Cash Flow Net Income
Leverage
01 2002 2003 2004 2005 20060.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
$0
$100
$200
$300
$400
$500
$600
$700
$800
20
Total Debt Debt to Total Capital
($ millions)
49
Dividend History*
*Adjusted for 2-for-1 stock split effective January 25, 2005
$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40$1.60$1.80
1999 2000 2001 2002 2003 2004 2005 2006
Annual Cash Dividend Paid Per Common Share Annual Diluted EPS
50
Historical Financial Profile Trends
• Top market positions• Positive industry fundamentals
• Diverse geographies• Broad range of industries and applications• Non-discretionary demand segments
• Low maintenance cap-x requirements• Restored debt protection measures• Low refinancing risk
Margin Strength
Cash Flow Consistency
Financial Flexibility
51
2007 Outlook by Region
• North America profit improvement is major driver in outlook for record 2007 CPO results – High-teens US/Canada total price improvement year-over-year
– US/Canada firm-price and fee-based book of business appropriately hedged; open risks are primarily co-product values and corn basis
– Mexico results should remain strong across all segments
• Higher South America results expected– Brazil recovery should continue
– DEMSA and Getec acquisitions expected to contribute
• Asia/Africa growth anticipated– Strength in Pakistan and improvements in Thailand/China
– South Korea profitability challenges remain
• International business model should allow for pass-through of increasing corn costs
52
Key Target – GAAP ReconciliationReturn on Capital Employed at December 31
($ millions) Cumulative translation adjustment* 257 292
Minority interest in subsidiaries* 17 18
Redeemable common stock* 29 33
Total debt* 528 568
Less:
Cash and cash equivalents* (116) (101)Capital employed* (a) $2,041 $1,992
Operating income $224 $183
Adjusted for:
Income taxes (at effective tax rates of 35.25% in 2006 and
37.5% in 2005) (79) (69)
Adjusted operating income, net of tax (b) $145 $114
Return on Capital Employed (b ÷ a) 7.5% 6.0%
* Balance sheet items used in computing capital employed represent beginning of period balances
53
Key Target – GAAP ReconciliationDebt to Total Capital at December 31
($ millions)Debt to Capitalization percentage 2006 2005Short-term debt $74 $57 Long-term debt 480 471
Total debt (a) $554 $528
Deferred income tax liabilities $121 $128
Minority interest in subsidiaries 19 17
Redeemable common stock 44 29
Share-based payments subject to redemption 4 -
Stockholders’ equity 1,330 1,210
Total capital $1,518 $1,384
Total debt and capital (b) $2,072 $1,912
Debt to Capitalization percentage (a ÷ b) 26.7% 27.6%
54
Key Target – GAAP ReconciliationDebt to EBITDA Ratio at December 31
($ millions)
Debt to EBITDA ratio 2006 2005Short-term debt $74 $57 Long-term debt 480 471
Total debt (a) $554 $528
Net income $124 $90
Add back:
Minority interest in earnings 4 3Provision for income taxes 69 55Interest expense, net of interest income 28 32
Depreciation 114 106
EBITDA (b) $339 $286
Debt to EBITDA ratio (a ÷ b) 1.6 1.8
55
Key Target – GAAP ReconciliationOperating Working Capital as % of Net Sales
($ millions)
Operating Working Capital as a percentage of Net Sales 2006 2005Current assets $837 $685
Less: Cash and cash equivalents (131) (116)Less: Deferred income tax assets (16) (13)Adjusted current assets $690 $556
Current liabilities $517 $424
Less: Short-term debt (74) (57)
Less: Deferred income tax liabilities (14) (1)
Adjusted current liabilities $429 $366
Operating working capital (a) $261 $190
Net sales (b) $2,621 $2,360 Operating Working Capital as a percentage of Net Sales (a ÷ b) 8.1%10.0%
56
Geographic Segments – Annual Net Sales/Operating Income 2001 through 2006
2006 2005 2004 2003 2002 2001Net sales
North America 1,588 1,422 1,419 1,329 1,219 1,212
South America 670 603 556 495 401 440
Asia/Africa 363 335 308 278 251 235
Total 2,621 2,360 2,283 2,102 1,871 1,887
Segment operating income*
North America 130 59 87 68 56 65
South America 84 101 98 83 58 68
Asia/Africa 53 53 48 54 54 45
Operating income 267 183 179 174 153 166*Geographic segments only
($ millions)
57
Net Sales – Top Six CountriesYear Ended: 2001-2006
2006 2005 2004 2003 2002 2001
United States 770$ 710$ 765$ 738$ 605$ 599$
Mexico 532 450 383 331 332 390
Canada 286 262 271 260 281 224
Sub Total 1,588$ 1,422$ 1,419$ 1,329$ 1,218$ 1,213$
Brazil 350$ 322$ 288$ 251$ 195$ 200$
Korea 185 186 187 170 162 155
Argentina 129 114 106 102 63 100
Others 369 316 283 250 233 219
Total 2,621$ 2,360$ 2,283$ 2,102$ 1,871$ 1,887$
($ millions)
58
Long-Lived Assets – Top Six Countriesas of December 31: 2001-2006
2006 2005 2004 2003 2002 2001
United States 465$ 428$ 407$ 406$ 433$ 434$
Mexico 365 382 401 426 433 457
Canada 171 176 173 165 147 151
Sub Total 1,001$ 986$ 981$ 997$ 1,013$ 1,042$
Brazil 219$ 160$ 125$ 112$ 88$ 131$
Korea 280 252 243 212 210 186
Argentina 125 120 117 116 67 135
Others 199 183 175 171 146 158
Total 1,824$ 1,701$ 1,641$ 1,608$ 1,524$ 1,652$
($ millions)
59
Summary Balance Sheet2006, 2005 and 2004
2006 2005 2004
Current assets 842$ 685$ 684$ Net fixed assets 1,356 1,274 1,211 Other assets 470 430 472 Total assets 2,668$ 2,389$ 2,367$
Current liabilities* 429$ 367$ 374$ Total debt 554 528 568 Other liabilities 307 255 311 Redeemable equity 44 29 33 Stockholders' equity 1,330 1,210 1,081 Total liabilities and equity 2,668$ 2,389$ 2,367$ *Excludes short-term debt
($ millions)
60
Summary Cash Flow2006, 2005 and 2004
2006 2005 2004
Cash flow from operations 230$ 245$ 166$ Net income 124 90 94 Depreciation 114 106 102 Working capital (increase)/decrease (27) 60 (37) Other 19 (11) 7
Cash flow from investing (210)$ (141)$ (149)$ Fixed assets, net (168) (136) (103) Acquisition (42) (5) (68) Sale of investment - - 21 Other - - 1
Cash flow from financing (6)$ (91)$ 13$ Net increase (decrease) in debt 16 (44) 6 Dividends paid to CPO common (26) (21) (17) Issuance (Repurchase) of common, net (2) (25) 30 Dividends paid to minority shareholders - (1) (6)
($ millions)
61
Creditworthiness Improvement2002 – 2006
($ millions)
EBITEBITDAInterest Expense, NetTotal DebtBook CapitalMarket Capitalization
EBITDA Interest Coverage
EBIT Interest Coverage
Total Debt/EBITDA
Total Debt/Book Capitalization
Total Debt/Market Capitalization
Subsidiary Debt as a % of Total Debt
2005 2004(b)
180$ 178$ 286 280
32 33528 568
1,912 1,8772,465 2,794
2006
225339
28554
2,0723,308
$
2003 2002 (a)
174$ 275
39550
1,8022,146
153$ 25637
6001,7102,013
8.9x 8.5x 7.1x 6.9x
5.6x 5.4x 4.5x 4.2x
1.8x 2.0x 2.0x 2.3x
28% 30% 31% 35%
21% 20% 26% 30%
14% 20% 18% 25%
(c)
12.0x
8.0x
1.6x
27%
17%
18%
(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
62
Percent of Net Sales
2006 2005 2004 2003 2002 2001
Starch 22% 23% 22% 21% 20% 20%
Sweeteners 55% 53% 52% 54% 55% 57%
Co-products & other 23% 24% 26% 25% 25% 23%
Major Industries
Processed foods 19% 19% 22% 21% 21% 22%
Soft drink 18% 18% 17% 17% 17% 20%
Brewing 11%
Animal feed 10% 11% 19% 19% 16% 15%
63
Historical Update – North America1997 to 2003 Driven by Mexican HFCS Situation
*Source: Corn Products Competitive Intelligence Process
1997 Large Mexican HFCS market – border closed to US exportsResult: US overcapacity – utilization: 90s% low 70s%*
Corn Products’ locally produced HFCS in MexicoStrong results through 2001
1998 and 1999 US Recovery underway2000 Detour2001 to present US corn refiners environment
Major structural change among US corn refiners“Grind” capacity utilization: 90s%*
- Ethanol demand: more than doubledFinishing capacity utilization improved*
2002 & 2003 Corn Products US/Canada results – increased substantiallyMexico levies 20% tax on HFCS-sweetened soft drinks
64*Source: Corn Products International Competitive Intelligence Process**Source: Associated Press, August 17, 2004 ; ***Source: Decatur Daily, October 4, 2005
Competitive arena*: US HFCS processor company changes
November 2000: 7 HFCS producers – 3 with 17% of capacity
March 2002 thru present: 4 HFCS producers with 97% of capacity
Historical Update – North America
ProGold MCP Cerestar
Cargill
Cargill ADM 30%
CPMCP
ADM
Coors
Gone1997
2000
2002
2004
2005
2006
Cargill
Shuts ½ Dayton
Idles Dimmitt, TX**
Idles Decatur, AL***
Restarts Decatur, AL
65*Source: Corn Products Competitive Intelligence Process
1997 Large Mexican HFCS market – border closed to US exportsResult: US overcapacity – utilization: 90s% low 70s%*
CPO’s locally produced HFCS in MexicoStrong results through 2001
1998 and 1999 US Recovery underway2000 Detour2001 to present US corn refiners environment
Major structural change among U.S. corn refiners“Grind” capacity utilization: 90s%*
- Ethanol demand: more than doubledFinishing capacity utilization improved*
2002 & 2003 CPO US/Canada Operating Income – increased substantiallyMexico – 20% tax on HFCS-sweetened soft drinks
Except for ethanolNo expansions since 1997*
Historical Update – North America1997 to 2003 Driven by Mexican HFCS Situation
66
North America Region – Margin Growth
• 100 years old in the US
• Improving industry fundamentals– Higher utilization rates
– Industry rationalization/plant closures
– Ethanol demand growing
– Higher US, Canadian contract pricing
• Mexico leadership– Resumption of HFCS sales and TRQs
– HFCS beverage usage tax eliminated
Canada 3 plants
Mexico 3 plants
United States 3 plants
Canada
Mexico
United States
67
North America Ingredients
BASIC INGREDIENTS
HFCSCorn StarchCorn SyrupLiquid DextroseBlends
SPECIAL INGREDIENTS
• Refined Corn Oil• Crystalline Dextrose• Modified Starches• Maltodextrine• Sorbitol• Fructooligosaccharide• Caramel Color
ANIMAL NUTRITION & HEALTH
• Gluten Feed• Gluten Meal• Other
68
• Long operating history• Geographic growth opportunities• Significant capacity shares• Favorable market drivers• Multi-national customers
migrating production to this region
Asian RegionSouth Korea 2 plantsThailand 1 plantMalaysia 1 marketing officePakistan 2 plantsChina 1 plant (JV)African RegionKenya 1 plantSouth Africa 4 plants (TLA)
Asia/Africa Region – Expansion Focus
Kenya
Pakistan
Malaysia
Thailand
South Africa
South KoreaChina
69
Asia/Africa Ingredients
BASIC INGREDIENTS
Corn StarchCorn SyrupHFCSTapioca StarchTapioca SyrupDextrose
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
70
CornBasic 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