Ingredion NYSE: INGR reported a weaker-than-expected first quarter of 2026, as operational problems at its Argo facility weighed heavily on results in its Food & Industrial Ingredients U.S. Canada segment, while its Texture & Healthful Solutions business continued to post volume growth.
Chairman, President and CEO Jim Zallie said the company had anticipated a difficult comparison against a strong first quarter last year, but results were “weaker than anticipated” because of issues at Argo. Overall first-quarter net sales declined 1% from a year earlier, while adjusted operating income fell 22%.
“The issues at Argo are the predominant driving factor in relationship to the margin decline and the operating income decline in that business,” Zallie said during the call.
Argo Operational Issues Drive Earnings Pressure
Ingredion said it had expected $10 million to $15 million of additional costs in the quarter as the Argo facility recovered to normal grind rates. Instead, the total first-quarter impact was $40 million, driven by higher maintenance spending, elevated rework costs and higher logistics expenses as the company sourced products from other facilities to meet customer commitments.
Zallie said the company assembled a multidisciplinary team of internal and external experts to address refinery process failures, and downstream production returned to normal levels by the end of the quarter. However, on April 10, the facility experienced an isolated thermal event in corn germ processing operations. Zallie said the front-end grind and refinery were not affected, but crude oil production went offline.
“Our teams are working diligently to restore our germ processing capabilities, and we expect to return to normal operations in this unit within the second quarter,” Zallie said.
During the question-and-answer portion of the call, Zallie said earlier issues from last year had been resolved and were not a factor in the first quarter. He also said the April 10 event was isolated to the germ processing area and that the company’s outlook assumes Argo sustains its current production and yield levels for the rest of the year.
Segment Performance Mixed
Vice President and Interim CFO Jason Payant said first-quarter net sales were $1.8 billion, down 1% year over year. Gross profit declined 14%, and gross margin fell to 22.4%, primarily because of Argo operational challenges, lower volumes and unfavorable mix in Food & Industrial Ingredients U.S. Canada and LATAM, along with transactional foreign exchange impacts in Mexico.
- Texture & Healthful Solutions: Net sales increased 2%, supported by 2% volume growth and 2% favorable foreign exchange, partly offset by lower price mix. Operating income rose 1%.
- Food & Industrial Ingredients LATAM: Net sales increased 1%, helped by foreign exchange, while operating income declined 9% to $150 million. Payant cited Mexico transactional currency impacts and softer volumes in Mexico and the Andean region.
- Food & Industrial Ingredients U.S. Canada: Net sales declined 9%, driven by Argo and weaker consumer demand. Operating income was $34 million.
- All Other: Net sales rose about 3%, supported by protein fortification growth, particularly in higher-value isolate and specialty protein applications. Operating income improved by more than $3 million year over year.
Adjusted diluted earnings per share declined by $0.63 from the prior year. Payant said margin impacts reduced EPS by $0.71 and volume impacts reduced EPS by $0.14, primarily due to the operational issues discussed on the call. Those headwinds were partly offset by foreign exchange benefits, other income benefits and non-operating items, including share repurchase benefits.
Texture and Healthful Solutions Remains a Growth Area
Despite the weaker overall quarter, Zallie highlighted continued momentum in Texture & Healthful Solutions, which posted its eighth consecutive quarter of volume growth. He said growth was led by clean label and texture solutions in EMEA and Asia Pacific.
Zallie said the company’s solutions portfolio represents approximately $1 billion, or 40% of the segment’s revenue. Clean label remained a major growth driver, with functional native starches benefiting from customer demand for simpler ingredient labels and reformulation support. Examples cited on the call included texturizing systems for dairy and dairy alternatives, as well as healthier bakery and beverage reformulations.
The company also reported growth in its Healthful Solutions portfolio. Sales of pea protein isolates grew more than 50% in the quarter, while clean-tasting stevia-based solutions grew 6%. Zallie said demand was broad-based across branded and private label products.
In response to analyst questions about pricing and margins in the segment, Zallie said margin compression was partly related to a rapid rise in tapioca costs in Asia Pacific, with a typical lag of about a quarter to a quarter and a half before pricing actions flow through.
Company Updates 2026 Outlook
Ingredion lowered its 2026 outlook to reflect the Argo impact, foreign exchange headwinds from the strength of the Mexican peso, higher energy-related input and logistics costs, and softer LATAM volumes.
For the full year, the company now expects net sales to be flat to up low single digits and adjusted operating income to be flat to down low single digits. Adjusted EPS is expected to be between $10.45 and $11.15. The company expects cash from operations of $725 million to $825 million and capital expenditures of $400 million to $440 million.
By segment, Ingredion expects Texture & Healthful Solutions operating income to be up low single digits, with volume growth partly offset by higher input cost inflation. Food & Industrial Ingredients LATAM net sales are expected to be flat to down low single digits, while operating income is expected to decline by low single digits. Food & Industrial Ingredients U.S. Canada net sales are expected to be down low single digits, with operating income down low double digits because of Argo.
For the second quarter, Ingredion expects net sales to be flat to up low single digits and adjusted operating income to be down high single digits as it laps a strong second quarter in 2025.
Brazil Footprint and Capital Allocation
Ingredion also announced plans to cease operations at its Cabo manufacturing facility in northeast Brazil by the end of the second quarter. Zallie said the move is part of broader efforts to improve efficiency and competitiveness in Brazil. He said the economic growth expected in the region when the investment was made “hasn’t lived up to its potential.”
The company also discussed capital allocation, reporting $33 million in year-to-date cash from operations after planned working capital investments, $110 million in capital expenditures net of disposals, $52 million in dividends and $14 million in share repurchases during the quarter. Payant said the company still plans to continue share repurchases in line with its full-year targeted commitment.
Zallie said Ingredion remains focused on enterprise productivity, targeted pricing actions and disciplined investment in growth areas, particularly Texture Solutions and Healthful Solutions. He also said the company continues to evaluate acquisition opportunities but will remain disciplined in pursuing value-accretive deals.
About Ingredion NYSE: INGR
Ingredion Incorporated is a global ingredient solutions company specializing in the production and sale of starches, sweeteners, nutrition ingredients and biomaterials derived primarily from corn and other plant-based raw materials. The company serves a diverse set of industries, including food and beverage, brewing, pharmaceuticals and personal care, providing functional ingredients that enhance texture, stability, flavor and nutritional value in a wide array of end products.
The company's product portfolio comprises native and modified starches, high-fructose corn syrup, dextrose, maltodextrins, specialty sweeteners and various texturizers.
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