Presentation to
JPMorgan Brazil Investor Tour March 3, 2008 Jorge L. Fiamenghi Vice President and President, South America Division
David A. Prichard Vice President, Investor Relations
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; 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, 2006 and subsequent reports on Forms 10-Q or 8-K. 2
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
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
End User Products Customers in About 60 Diverse Industries/70 Countries Sweeteners Carbonated beverages Beer Sports drinks Frozen desserts Canned fruits and vegetables Drink mixes Presweetened cereals Breads Fruit juices Jams and jellies Chewing gum Cream filling Syrups Candy
Food Starches
Industrial Starches
Fine Chemicals/ Pharmaceuticals
Cereals Soups Sauces Drink mixes Pudding Cakes Cookies Crackers
Paper Corrugated boxes Textiles Adhesives Baby and face powders Rubber Leather Detergents
IV Dextrose Tableting excipients Fermentation feedstocks
5
Sales by Product Category & Markets Served 60%
55%
54%
52%
55%
53%
57%
50% 40% 30%
Sweeteners 25%
20% 10%
20%
25% 21%
26% 22%
24% 23%
23% 22%
21%
Co-Products & Other
0% 2002
2003
2004
2005
2006
Starches
22%
2007
Processed Foods Industry, 25% Other, 37%
Soft Drink Industry, 16% Brewing Industry, 11%
Animal Feed, 11% 6
Geographic Installed-Capacity Leadership Strong and Unique Global Position Producing: Marketing:
15 countries**,*** 70 countries
35 plants**,***
Rank*
North America
3
United States Canada, Mexico
4 1
South America
1
Argentina, Brazil, Chile, Colombia, Peru, Venezuela**
Asia/Africa South Korea, Thailand, Pakistan, China***, Kenya South Africa** *Share of production capacity
Top Tier or 1
**Technical License Agreements ***Joint Venture
Source: Corn Products International Competitive Intelligence Process
7
Positive Drivers/Strategic Focus Favorable Global Trends
Our Operating Approach
• Rising populations & GDP rates • Strategize globally—execute locally • Improving standard of living • Per capita income growth
• Leverage core competencies
• Preference for improved diet
• Delivered cost leadership in local markets
• Personal/health care awareness
• Anticipate/satisfy changing customer and consumer needs • Become even closer to customer
8
Core Capabilities – A Building Platform
■
Strong Americas position
■
Managing geographic breadth • Cultural understanding • Performance in “difficult” environments
■
Reputation/assets/infrastructure
■
Managing alliance relationships 9
Mission and Pathways To be the Premier Regional Provider of Refined, Agriculturally Based Products and Ingredients Worldwide 4. Grow Defensible
1. Excel at the Base Business
2003
2. Selectively Drive Organic Growth in the Base Business
3. Expand ValueAdded Product Portfolio Through MultiGeographic Alliances and Acquisitions
5. Be an Ingredients Supplier
Businesses in New High-Growth Regions
2008
10
Product Platforms and Target Markets Markets Food
Beverage
Industrial
Health & Personal Care
Animal Nutrition
Platforms Sweeteners
Strategic Accounts & Geographies
Starches
New Ingredients
Mission: “To be the Premier Regional Provider of Refined, Agriculturally Based Products and Ingredients Worldwide” 11
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 12
Management/Shareholder Alignment • Enhancing shareholder value – Officers average nearly 20 years of experience
• Executive compensation aligned with shareholders Short-term – EPS/Operating Income – Operating Cash Flow
Long-term 80% – Shareholder return 50% 20% – Return on capital employed (ROCE) 50%
• Management variable compensation Annual Incentive Plan – EPS/Operating Income – Individual – Working Capital/ROCE
60% 20% 20%
• Direct stock ownership targets for officers • Significant inside ownership
13
2007 Review • Second consecutive year of record sales and earnings – 5-year strategic and financial targets reached or exceeded a year earlier – 4-Year EPS CAGR is 25%, with sales exceeding $3 billion and operating income over $300 million – ROCE of 11.4% exceeds 8.5% -10% target range and cost of capital for first time – Raised quarterly dividend by 22% in September 2007 – New 5 million share repurchase program authorized in November 2007 – Polyols acquisition completed in February 2007 to broaden sweetener line
• Business model performed well in unprecedented and volatile global commodity environment 14
2008 Outlook •
Expect higher diluted EPS, between $2.65 and $2.85, versus $2.59 in 2007 which included a 5-cent gain from the Company’s CME Group shares
•
Forecast 2008 net sales to reach $3.7 billion vs. $3.39 billion in 2007
•
Anticipate ROCE to again exceed cost of capital
•
Estimated Cap-X of about $200 million reflects continued spending from 2007 on attractive growth projects –
Polyol investments in the Americas; new modified starch capacity in Mexico
–
Product channel expansions in Argentina, Brazil, Colombia, Mexico, Pakistan and Thailand
15
2008 Outlook by Region •
North America profit improvement expected to continue – Higher contract pricing in US/Canada starch and sweeteners book of business – Including fee-based and multi-year contracts, overall 2008 pricing for entire US/Canada book of business increased in low double-digit range – US/Mexico open trade for sugar and sweeteners starts under NAFTA – Expect higher Mexico volumes, including HFCS, in 2008
•
South America should continue to grow – Better results expected in Brazil – Improvement anticipated in the Southern Cone
•
Weaker results expected in Asia/Africa – Reduced operating income in South Korea •
Lower volumes from sluggish domestic economy and impact of higher selling prices, along with high corn and ocean freight rate costs
•
Tough first half comparison
•
Aggressively working to improve the performance
– Higher results expected in Pakistan and Thailand 16
Focus on South America
17
External Environment • Political environment – Democratic governments in the region – No major changes expected from political model in next several years
• Economic environment – – – – – –
Growing GDP Per-capita income improving Strong agriculture and growing industry Free market/borders Low inflation – under control Currencies appreciated vs. U.S. dollar 18
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, Peru and Brazil – no HFCS business 19
External Environment (cont’d.) • International competitors – Brazil-based operations • • • •
Cargill National Starch Avebe D.D. Williamson
– Offshore exporters • • • •
• Domestic competitors – Argentina • Arcor • Ledesma • Glutal
– Brazil • Manioc processors
Staley ADM Roquette Sethness
20
Historical Context • CPO has 80 years of performance – Argentina started in 1928 and Brazil in 1929 – Expansion to other countries starting in the 1960s
• Strong leadership: ~75% share of installed capacity* • Full territory coverage – 12 plants and TLA with Venezuela • 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 21
Corn Products South America •
Andean Region –
– –
•
Southern Cone – – – – –
•
Colombia • 1 corn refining plant • 1 tapioca plant • 2 tolling facilities Venezuela 1 plant (TLA) Peru 1 plant Argentina Chile Uruguay Paraguay Bolivia
2 plants 1 plant Distribution warehouse Sales agent Sales agent
Brazil – – – – –
3 corn refining plants 1 tapioca plant 1 adhesive & caramel color plant 1 polyols plant Ingredient Technology Center 22
South America Ingredients BASIC INGREDIENTS z z z z z z
High Maltose Syrup Regular Starch Glucose Corn Syrup HFCS Liquid Dextrose Syrup Blends
• • • • • • • • • • • •
SPECIAL INGREDIENTS
ANIMAL NUTRITION & HEALTH
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
• Gluten Feed • Gluten Meal • Other, Basic & Special Ingredients
Raw Materials: Regular and Waxy Corn, Tapioca, Wheat & Soy Flour, Sucrose 23
Inspiration
“Every day, in every home, at least one of our ingredients is to be used to make the quality of life better”
24
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 and mannitol pharma and food grades
25
Net Sales & Operating Income/Margins South America – 2001-2007 Net Sales ($ Millions)
Operating Income ($ Millions) 200
$1,000
$925
180 160
$800
140
$670
$600
$556
120
$603 12.4%
100
$495 $400
$440
80
$401
15.5%
17.6% 16.8%
16.8%
12.5%
60
14.5%
$200
40 20
$0
0 2001
2002
2003
Net Sales
2004
2005
2006
2007
Operating Income 26
Net Sales South America – 2001-2007 ($ millions) $600
$1,000
925
$900 $500
$800 670
$400
$700
603
$600
556 495
$300
$500
440 401
498
$400
$200
$300
350
322 288
267
251
$100
200
195 144
140
106
102
100
167
163
143
191 114
129
$200 160
$100
63
$0
$0 2001
2002
2003 Brazil
2004 Other
2005 Argentina
2006
2007
Total SA
27
Total Assets South America – 2001-2007
($ millions) $1,000
$902 $800
$667
$600 $559 $521
$489
$468
$400 $360 $200
$0 2001
2002
2003
2004
2005
2006
2007
28
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 Balsa Nova-PR Oligosaccharides Sorbitol, mannitol Tapioca starch
Corn Wet Milling
Cabo-PE Corn Wet Milling
Alcantara-RJ Getec Polyols
Conchal-SP Tapioca Milling
Mogi Guaçu-SP Corn Wet Milling
Jundiaí-SP Caramel Color/Vegetable Adhesives 29
South America Strategic Focus 5. Be an ingredients supplier
1. Excel at the Base Business
2003
2. Selectively Drive Organic Growth in the Base Business
3. Expand Valueadded Product Portfolio Through Multi-Geographic Alliances and Acquisitions
4. Grow Defensible Businesses in New Highgrowth Regions
2008
30
Strategic Overview • Corn Products in the South America 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 31
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 – Solid margins (mid-teens average OI% for any 3-year period ) 32
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 – Monitor competition to protect share 33
Cap-X and D&A South America – 2001-2007 ($ millions)
$90 $80 77
$70 $60 $50
$30 $20
49
48
$40
$10
31
30
28 28
30
16 17
18
20
2002
2003
2004
23
25
2005
2006
$0 2001
Cap-X
2007
D&A 34
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
– Expand specialties exports outside the region 35
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 36
Recent Strategic Actions •
Getec polyols acquisition in Brazil in February 2007 – Products include liquid sorbitol, mannitol and anhydrous dextrose – Serves personal care, food, candy and confectionary, and pharmaceutical markets – Formed in 1964 and now fully integrated in our Brazilian business
•
DEMSA acquisition in December 2006 – Peru’s only corn refiner established in 1964 and with annual sales of about $15 million at the time of purchase – 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 improve overall performance of Andean region
• • •
Both acquisitions enhance CPO’s historically strong market position and extensive territory coverage in South America Infant food business development in Colombia Alliance with Bunge in Brazil to expand bakery and animal nutrition segments 37
Key Going-Forward Success Factors • Investments to support growth strategy – – – –
Brazil, Argentina and Colombia grind expansions • Underway – to be completed in 2008 New sorbitol facility started up in Colombia New polyols facility in Brazil to be completed in 2008 3 additional modified specialty ingredient channels for Brazil • Investment completed by year-end 2006 • Products launched in 2007 with sales growth expected
• Innovation and agile culture • Historic focus and accomplishment – – –
Meeting all the needs of our customers Basic and specialty ingredients offerings Providing return and growth 38
Thank You
Q&A 39
40
Appendix
41
Management Profiles Samuel C. Scott III Chairman, President and Chief Executive Officer Samuel Scott, 63, 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 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 2004. 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 1980. 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. 42
Management Profiles (cont’d.) Jorge L. Fiamenghi Vice President and President, South America Division Jorge Fiamenghi, 52, 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.
43
Corn Wet Milling Process
44
Ingredient Applications Ingredient Applications
p ch y ru tar tarch S S n n tri /Cor se il eed Meal eal ater fied fied S n x i F e O d e mo odi extri altod lucos extro CS Corn uten luten rm Mteepw FOS M D Un D M G sc S HF Gl G Ge •
• •
•
• •
Building Materials
•
•
•
•
Canners & Packers
•
•
•
•
Cereals
•
•
•
Chemicals
•
Condiments Confectionery, Gum & Cough Drops
Animal Feeds & Pet Foods Beverages & Soft Drinks
• •
• •
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
• •
•
•
•
•
•
• • •
•
•
•
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
•
•
•
•
•
•
• •
• • •
•
•
•
• • 45
Financial Review 46
Summary Income Statement Year Ended December 31 (In millions, except per share amounts)
Net sales Gross margin Operating income Operating margin Net income Net margin Diluted earnings per share Effective tax rate Weighted average diluted common shares outstanding
2007
2006
Change
$3,391
$2,621
29%
17.3%
15.9%
347
224
10.2%
8.6%
198
124
5.8%
4.7%
$2.59
$1.63
33.5%
35.3%
76.5
75.8
55%
60%
59%
47
Key Metrics Year Ended December 31 ($ millions)
2007
2006
Return on capital employed
11.4%
7.5%
Debt to total capital
26.6%
26.7%
Debt to EBITDA (TTM)
1.4
1.6
Operating working capital
$395
$261
% of 12-month sales
11.6%
10.0%
Net debt (debt less cash)
$474
$423
(excluding short-term debt, cash and deferred tax)
48
Diluted EPS and Operating Margin*
$3.00
Expect diluted EPS in a range of $2.65 to $2.85
$2.50 $2.00 $1.50 $1.00 10.2%
$0.50 8.2%
8.3%
7.8%
7.8%
8.6%
$0.00 2002
2003
2004
Diluted EPS
2005
2006
2007
2008 Outlook
Operating Margin
*Adjusted for 2-for-1 stock split effective January 25, 2005 49
Cap-X and D&A ($ millions)
$180 $160 $140 $120 $100
Cap-X D&A
$80 $60 $40 $20 $0 2001
2002
2003
2004
2005
2006
2007
2008 Cap-X Budget is Approximately $200 Million 50
Cash Flow and Total Debt ($ millions) Cash Flow from Operations
Leverage
$300
40.0%
$700
35.0%
$600
$250
30.0% $500 $200 25.0% $400 $150
20.0% $300 15.0%
$100 $200 10.0% $50 $100
$0
5.0%
$0 2002
2003
2004
Cash Flow
2005
2006
Net Income
2007
0.0% 2002
2003
Total Debt
2004
2005
2006
2007
Debt to Total Capital 51
Dividend History* $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 1999
2000
2001
2002
2003
2004
Annual Cash Dividend Paid Per Common Share *Adjusted for 2-for-1 stock split effective January 25, 2005
2005
2006
2007
Annual Diluted EPS 52
Key Target – GAAP Reconciliation Return on Capital Employed at December 31 ($ millions) Return on Capital Employed Total stockholders’ equity*
2007 $1,330
2006 $1,210
214
257
Minority interest in subsidiaries*
19
17
Redeemable common stock*
44
29
4
-
554
528
(131)
(116)
$2,034
$1,925
$347
$224
(116)
(79)
$231
$145
11.4%
7.5%
Add: Cumulative translation adjustment*
Share-based payments subject to redemption* Total debt* Less: Cash and cash equivalents* Capital employed* (a)
Operating income Adjusted for: Income taxes (at effective tax rates of 33.5% in 2007 and 35.3% in 2006) Adjusted operating income, net of tax (b) Return on Capital Employed (b ÷ a) * Balance sheet items used in computing capital employed represent beginning of period balances
53
Key Target – GAAP Reconciliation Debt to Total Capital at December 31 ($ millions) Debt to Capitalization percentage
2007
2006
Short-term debt Long-term debt
$130 519
$74 480
Total debt (a)
$649
$554
$133
$121
Minority interest in subsidiaries
21
19
Redeemable common stock
19
44
9
4
1,605
1,330
$1,787
$1,518
Total debt and capital (b)
$2,436
$2,072
Debt to Capitalization percentage (a÷b)
26.6%
26.7%
Deferred income tax liabilities
Share-based payments subject to redemption Stockholders’ equity Total capital
54
Key Target – GAAP Reconciliation Debt to EBITDA Ratio at December 31 ($ millions) Debt to EBITDA ratio Short-term debt Long-term debt
2007 $130 519
2006 $74 480
$649
$554
$198
$124
Minority interest in earnings Provision for income taxes Interest expense, net
5 102 38
4 69 28
Depreciation
125
114
EBITDA (b)
$468
$339
Debt to EBITDA ratio (a ÷ b)
1.4
Total debt (a) Net income Add back:
1.6
55
Key Target – GAAP Reconciliation Operating Working Capital as % of Net Sales ($ millions) Operating Working Capital as a percentage of Net Sales Current assets
2007 $1,089
2006 $837
Less: Cash and cash equivalents Less: Deferred income tax assets Adjusted current assets
(175) (13) $901
(131) (16) $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
$3,391
$2,621
11.6%
10.0%
Net sales for the last 12 months (b) Operating Working Capital as a percentage of Net Sales (a ÷ b)
56
Geographic Segments – Annual Net Sales/Operating Income 2001 through 2007 ($ millions) 2007
2006
2005
2004
2003
2002
2001
Net sales North America
2,052
1,588
1,422
1,419
1,329
1,219
1,212
South America
925
670
603
556
495
401
440
Asia/Africa
414
363
335
308
278
251
235
3,391
2,621
2,360
2,283
2,102
1,871
1,887
North America
234
130
59
87
68
56
65
South America
115
84
101
98
83
58
68
45
53
53
48
54
54
45
347
224
183
179
174
153
166
Total Segment operating income*
Asia/Africa Total operating income *Geographic segments only
57
Net Sales – Top Six Countries Year Ended: 2001-2007 ($ millions)
2007 United States
$ 1,021 $
2006
2005
2004
2003
2002
2001
770 $
710 $
765 $
738 $
605 $
599
Mexico
668
532
450
383
331
332
390
Canada
363
286
262
271
260
281
224
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
195
185
186
187
170
162
155
Argentina
160
129
114
106
102
63
100
Others
486
369
316
283
250
233
219
$ 3,391
$ 2,621
$ 2,360
$ 2,283
$ 2,102
$ 1,871
$ 1,887
Total
$
58
Long-Lived Assets – Top Six Countries as of December 31: 2001-2007 ($ millions) 2007
2006
2005
2004
2003
2002
2001
506 $
466 $
428 $
407 $
406 $
433 $
434
Mexico
370
365
382
401
426
433
457
Canada
188
154
176
173
165
147
151
Sub Total
$ 1,064
997
$ 1,013
$ 1,042
United States
Brazil
$
985
$
986
$
981
$
320 $
219 $
160 $
125 $
112 $
Korea
276
280
252
243
212
210
186
Argentina
137
125
120
117
116
67
135
Others
216
198
183
175
171
146
158
$ 2,013
$ 1,807
$ 1,701
$ 1,641
$ 1,608
$ 1,524
$ 1,652
Total
$
$
88 $
131
59
Summary Balance Sheet 2007, 2006 and 2005 ($ millions)
2007
2006
2005
Current assets Net fixed assets Other assets Total assets
$ 1,089 $ 837 1,500 1,356 514 452 $ 3,103 $ 2,645
$
Current liabilities* Total debt Other liabilities Redeemable equity Stockholders' equity Total liabilities and equity
$
$
544 $ 443 649 554 286 274 19 44 1,605 1,330 $ 3,103 $ 2,645
685 1,274 430 $ 2,389 367 528 255 29 1,210 $ 2,389
*Excludes short-term debt 60
Summary Cash Flow 2007, 2006 and 2005 ($ millions)
2007
2006
2005
Cash flow from operations Net income Depreciation Working capital (increase)/decrease Other
$
258 $ 198 125 (59) (6)
230 124 114 (29) 21
$
245 90 106 60 (11)
Cash flow from investing Fixed assets, net Acquisition Sale of investment Other
$
(232) $ (174) (59) 1
(210) (168) (42) -
$
(141) (136) (5) -
Cash flow from financing Net increase (decrease) in debt Dividends paid Issuance (Repurchase) of common, net Excess tax benefit on share-based compensation Other
$
15 $ 83 (33) (39)
(6) 16 (26) (2)
$
(91) (44) (22) (25)
6 (2)
6 -
61
Creditworthiness Improvement 2002 – 2007 ($ millions)
EBIT EBITDA Interest Expense, Net Total Debt Book Capital Market Capitalization EBITDA Interest Coverage
(b)
2007
2006
2005
2004
2003
$ 343 465 38 649 2,436 3,533
$ 225 339 28 554 2,072 3,304
$ 180 286 32 528 1,912 2,465
$ 178 280 33 568 1,877 2,794
$ 174 275 39 550 1,802 2,146
2002
(a)
$ 153 256 37 600 1,710 2,013
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
27%
27%
28%
30%
31%
35%
Total Debt/Market Capitalization
18%
17%
21%
20%
26%
30%
Subsidiary Debt as a % of Total Debt
23%
18%
14%
20%
18%
25%
(c)
(a) (b) (c)
Includes unusual items of $8 million pre-tax or $5 million after-tax. Includes net charges of $21 million pre-tax and $15 million after-tax. Market capital assumes year-end share prices
62
Percent of Net Sales 2007
2006
2005
2004
2003
2002
2001
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%
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%
Major Industries
63
Historical Update – North America 1997 to 2003 Driven by Mexican HFCS Situation 1997
1998 and 1999 2000 2001 to present
2002 & 2003
Large Mexican HFCS market – border closed to US exports Result: US overcapacity – utilization: 90s% Î low 70s%* Corn Products’ locally produced HFCS in Mexico y Strong results through 2001 US Recovery underway Detour US corn refiners environment y Major structural change among US corn refiners y “Grind” capacity utilization: 90s%* - Ethanol demand: more than doubled y Finishing capacity utilization improved* Corn Products US/Canada results – increased substantially Mexico levies 20% tax on HFCS-sweetened soft drinks
*Source: Corn Products Competitive Intelligence Process
64
Historical Update – North America Competitive arena*: US HFCS processor company changes
1997
Coors
ProGold
MCP
Gone
Cargill
ADM 30%
2000
CPMCP
2002
ADM
Cerestar
Cargill
Shuts ½ Dayton
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, 2005
65
Historical Update – North America 1997 to 2003 Driven by Mexican HFCS Situation 1997
1998 and 1999 2000 2001 to present
2002 & 2003
Large Mexican HFCS market – border closed to US exports Result: US overcapacity – utilization: 90s% Î low 70s%* CPO’s locally produced HFCS in Mexico y Strong results through 2001 US Recovery underway Detour US corn refiners environment y Major structural change among U.S. corn refiners y “Grind” capacity utilization: 90s%* - Ethanol demand: more than doubled y Finishing capacity utilization improved* 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
66
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
Canada
Mexico leadership –
Resumption of HFCS sales and TRQs
–
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
3 plants
Mexico
3 plants
United States
5 plants
United States
Mexico
67
North America Ingredients
BASIC INGREDIENTS z z z z z
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
68
Net Sales and Operating Income/Margins North America – 2001-2007 Net Sales ($ millions)
Operating Income ($ millions)
$2,200
300
$2,000
$2,052
250
$1,800 $1,600 $1,588
$1,400 $1,200
$1,419
11.4%
$1,422
$1,329 $1,212
$1,219
150
$1,000 $800 $600
200
8.2%
6.1% 5.4%
100
4.2%
5.1% 4.6%
$400
50
$200 $0
0 2001
2002
2003 Net Sales
2004
2005
2006
2007
Operating Income 69
Asia/Africa Region – Expansion Focus
Decades of operations in various countries Geographic growth opportunities Significant capacity shares Favorable market drivers Multi-national customers migrating production here South Korea China
Asian Region South Korea
2 corn refining plants
Thailand
1 tapioca plant
Malaysia
Regional marketing office
Pakistan
2 corn refining plants
China
1 corn refining plant (JV)
India
Rep office
African Region
Pakistan Thailand Malaysia Kenya
South Africa
Kenya
1 plant
South Africa
4 plants (TLA)
70
Asia/Africa Ingredients
BASIC INGREDIENTS z z z z z z
Corn Starch Corn Syrup HFCS Tapioca Starch Tapioca Syrup Dextrose
SPECIAL INGREDIENTS • • • • • • • •
Refined Corn Oil Modified Textile starch Modified Paper Starch High Maltose Syrup Dextrines Tapioca Oxidized Starch Tapioca Maltodextrine Oligosaccharides
ANIMAL NUTRITION & HEALTH • Gluten Feed • Gluten Meal • Other
71
Net Sales & Operating Income/Margins Asia/Africa – 2001-2007 Net Sales ($ Millions)
Operating Income ($ Millions)
120
$450 $400
$414
$350
$363 $335
$300
$150
80
$308 $278
$250 $200
100
$235
$251 21.5%
60 19.4%
19.2%
15.8%
14.6%
15.6%
10.9%
40
$100 20 $50 $0
0 2001
2002
2003 Net Sales
2004
2005
2006
2007
Operating Income 72
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 – Germ meal
4% 3%
*Note: These are only approximations due to our use of varieties of hybrids throughout our world 73
