WESTCHESTER, ILL. — James Zallie, president and chief executive officer of Ingredion, Inc., pointed to sales volume increasing in the second quarter ended June 30, which saw income and sales decrease.

Net income of $148 million, or $2.25 per share on the common stock, was down 9% from $163 million, or $2.46 per share, in the previous year’s second quarter. Operating income decreased 4% to $240 million from $251 million, primarily attributed to the impairment of an equity method investment and the impact of tornado damage to a US warehouse. Net sales decreased 9% to $1.88 billion from $2.07 billion. While volume was up $104 million, negative impacts came from foreign exchange, down $11 million, South Korea volume, down $80 million, and price/mix, down $204 million.

“Ingredion’s results for the second quarter exceeded our expectations with a strong recovery in volumes across the portfolio and strong growth in profitability, with adjusted operating income up 8% and gross margins up 240 basis points,” Zallie said in an Aug. 6 earnings call. “Profit growth was supported by improving volume, lower input costs and greater fixed-cost absorption. Sales were down 9% due to the pass-through of lower raw material costs as well as the lap of South Korea’s 2023 net sales.”

Ingredion divested its business in South Korea to an affiliate of the Sajo Group. Adjusted for the volume lost due to the divestment, volume was up 5%, Zallie said.

“As packaged food shipments gradually improved, our distributors have begun replenishing inventories in anticipation of continued demand, particularly in the US and Canada, where grocery retailers are witnessing growth in center-store sales,” he said.

Ingredion’s stock price on the New York Stock Exchange closed at $127.95 per share on Aug. 6, up 7% from a close of $120.01 on Aug. 5.

In the company’s Texture & Healthful Solutions business, operating income dropped 18% to $86 million from $105 million. Unfavorable price/mix was offset partially by recovering volumes and lower input costs. Net sales slipped 5% to $588 million from $618 million even though sales volume increased 8%.

“Price/mix was down 11% for the quarter, partly reflecting the pass-through of lower corn costs as well as higher pricing from last year when these businesses priced through double-digit inflation for both specialty corn and natural gas, primarily in Europe and in the US,” said James Gray, chief financial officer.

In Food & Industrial Ingredients – US and Canada, operating income increased 31% to $105 million from $80 million, primarily driven by lower raw material and input costs. Sales decreased 8% to $555 million from $604 million.

In Food & Industrial Ingredients – LATAM, operating income increased 29% to $130 million from $101 million, primarily because of lower input costs and improved volume. Net sales declined 5% to $630 million from $666 million. Dry weather and corresponding high prices for sugar in Mexico led to increased demand for sweeteners from Ingredion’s beverage customers, Zallie said.

In the quarter Ingredion increased its ownership in PureCircle by Ingredion, a producer of stevia-based sweeteners, by $40 million and now has an equity stake of 98%.

In the first half of the fiscal year, Ingredion’s net income of $364 million, or $5.54 per share on the common stock, was up 3% from $354 million, or $5.35 per share, in the same time of the previous year. Net sales declined 11% to $3.76 billion from $4.21 billion.

Ingredion adjusted its guidance for the fiscal year. Earnings per share now are expected in a range of $10.20 to $10.70, compared to previous guidance of $10.35 to $11. Adjusted EPS are expected in a range of $9.70 to $10.20, compared to a previous guidance of $9.20 to $9.85.

“So our second half is lapping prior-year customer destocking that we believe is no longer evident in the supply chain,” Zallie said. “Our second quarter’s strong volume growth builds off of the prior three quarters’ trend line that we’ve been reporting on.”