The company said that the reduction was due primarily to a combination of three factors that affected the US and Canada.
First, significantly higher net corn costs for the first quarter of this year compared to the same period last year, "driven by lower co-product values and the timing of corn purchases for contracted business". The firm also blamed higher energy and freight costs and manufacturing expense problems during the quarter.
"We are comparing US and Canadian first-quarter 2005 results to a very strong first quarter of 2004, which included the lowest corn costs for all of last year," said Sam Scott, CEO of Corn Products. "However, in addition to the expected increase in net corn and energy costs, the unanticipated manufacturing and freight expense issues contributed to results that were lower than our expectations."
Nonetheless, he added that the firm's other regions, namely Mexico, South America and Asia/Africa, had got off to a good start this year.
Corn Products plans to provide guidance for the full year when it releases its first quarter earnings on 19 April 2005. However, any downturn may not be a particular shock after a significant drop in profit in the closing months of 2004.
Fourth-quarter profit fell 41 percent as a result of restructuring in Mexico and South America, and perhaps, more significantly, North American sales saw the slowest rise, up 8 percent to $1.4 billion. South America had led the way with an increase in revenue of 12 percent to $556 million, while Asia and Africa were only a notch behind, seeing sales growth of 11 percent to $308 million.
Asia and other developing regions are key areas of devlopment for Corn Products, which in June last year took the decision to try and defend its market position by taking root in China and linking up with Shandong Juneng Electric Power Group Golden Corn Development company to manufacture modifed corn starch.
"Establishing what we expect will be our initial manufacturing presence in China is aligned with our company's strategy of growing businesses in new, high-growth regions," said Scott at the time.