What Ingredion (INGR) Said on Its Q3 Earnings Call

Key Points

• Ingredion lowered its 2026 outlook, expecting flat net sales and a mid-teens decline in adjusted operating income, with adjusted EPS of $9.25–$9.70. Higher Argo manufacturing and input costs, plus softer North American demand, drove the downgrade.
• Segment results were mixed: Texture & Healthful Solutions posted its 10th consecutive quarter of volume growth, but operating income fell 10% as tapioca costs surged; the company said tapioca was about 65% more expensive year over year.
• Ingredion’s planned acquisition of Tate & Lyle is progressing through regulatory and antitrust reviews, with closing still targeted for the second half of 2027.

Ingredion NYSE: INGR lowered its full-year outlook after third-quarter profit fell short of expectations, as higher manufacturing costs at its Argo facility, expensive inputs and softer North American demand weighed on results.

Third-quarter net sales fell 1% to $1.8 billion, though they rose 2% excluding the sale of the company’s Pakistan business. Adjusted operating income dropped 19% to $206 million, while reported operating income was $201 million.

Chairman, President and CEO Jim Zallie said production at Argo had stabilized and inventories were largely rebuilt, but the financial recovery was taking longer than expected. The company also adopted a more cautious view of consumer demand after seeing softer volumes beginning in August.

Argo Costs and Slower Demand Weigh on Outlook

Ingredion now expects 2026 net sales to be flat and adjusted operating income to decline by a mid-teens percentage. It forecast adjusted earnings of $9.25 to $9.70 per share and cash from operations of $650 million to $750 million. Capital spending remains projected at $450 million to $490 million.

The outlook assumes the company completes $100 million in share repurchases this year and excludes acquisition-related integration and restructuring costs, as well as potential impairment costs.

For the Food & Industrial Ingredients U.S./Canada segment, Ingredion expects full-year operating income to fall 35% to 40%, with net sales down by a mid-single-digit percentage. Third-quarter segment operating income declined 36% to $52 million, while volume fell 3%.

Zallie said about two-thirds of Argo’s third-quarter profit shortfall reflected higher-than-expected input and operating costs, including maintenance spending. The remainder came from a slower recovery in customer volumes amid soft food and beverage demand.

In response to an analyst’s question, Zallie said corn-extraction yields at Argo remained below historical and industry rates, although they had improved in October. Maintenance spending also ran ahead of budget. CFO Diego Reynoso said the company assumes it will continue that spending into the fourth quarter to support reliability.

Zallie said Ingredion was not cutting prices to win back Argo volumes, noting that much of the business is contracted and that pricing spreads were holding. He said softness was particularly evident in sweeteners and continued into the early part of the fourth quarter.

Texture Growth Meets Tapioca Pressure

Texture & Healthful Solutions recorded its 10th consecutive quarter of volume growth, with volume up 2%. Segment sales rose 1%, but operating income fell 10% to $95 million, largely because of higher tapioca and manufacturing costs and unfavorable price mix.

Reynoso said an industry-wide shortage of tapioca root in Thailand had pushed tapioca starch prices to record highs, up roughly 45% since January. Ingredion’s tapioca costs were approximately 65% higher than a year earlier, he said, with a roughly one-quarter lag in recovering costs through pricing.

Zallie said tapioca prices were easing slightly but remained elevated. He said the company was not seeing material substitution away from tapioca and did not expect the same degree of margin pressure from that factor in 2027, although it was too early to quantify the company’s outlook for next year.

Clean Label Solutions sales rose 8% in the first nine months, with growth in every region, Zallie said. Ingredion expects full-year Texture & Healthful Solutions sales to rise by a low-single-digit percentage and operating income to be flat to up by a low-single-digit percentage.

Latin America and Acquisition Progress

Food & Industrial Ingredients LATAM volume rose 4% in the quarter, led by brewing and beverage customers in Mexico and Brazil. Sales increased 7%, but operating income fell 6% to $109 million, reflecting the transactional impact of a stronger Mexican peso and an earthquake in Colombia.

Ingredion’s Cali plant was offline for about a week after the earthquake. Reynoso said customers subsequently came back online, but for roughly two to three weeks the company could produce while some customers could not pick up products because of damage to facilities and transportation infrastructure.

Ingredion expects LATAM operating income to decline by a mid- to high-single-digit percentage for the year, citing currency effects, lower-than-expected Mexican consumer demand and the earthquake’s impact.

Zallie said the company’s planned acquisition of Tate & Lyle was progressing through regulatory and antitrust reviews after shareholder approval in July. Ingredion continues to target a closing in the second half of 2027, while integration planning is underway.

The company has identified other potential plant consolidations but wants to wait until it can assess opportunities across the combined network, Zallie said.

About Ingredion (NYSE:INGR)

Ingredion Incorporated NYSE: INGR is a global ingredient solutions provider that develops and produces starches, sweeteners, texturizers, fibers, plant-based proteins and other specialty ingredients. The company processes plant-based raw materials, including corn, tapioca, potato, rice and other grains, into ingredients used by manufacturers across a range of industries.

Ingredion's products support food and beverage applications such as bakery products, dairy and alternative dairy, confectionery, beverages and prepared foods.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.