2012 Annual Report

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2012 Annual Report Ingredients of a Great Company 2012 Annual Report INGREDION NORTH AMERICA Ingredion Incorporated is a leading global Large stable market with targeted ingredient provider to the food, beverage, growth opportunities and a strong brewing and pharmaceutical industries as position in Mexico. well as numerous industrial sectors. Our ingredients are a vital part of everyday life. % We make starch and sweetener ingredients 57 2012 net sales that add taste, texture and performance to a wide variety of beverages and prepared foods. Our products are used to provide health and wellness solutions as well as pharmaceutical ingredients for IV applications. We also supply ingredients to the personal care, paper and corrugated industries and to the emerging bio-materials sector. Headquartered in Westchester, IL, Ingredion Incorporated has manufacturing, R&D and sales offices in over 40 countries and employs more than 11,000 people worldwide. SOUTH AMERICA Potential to continue building upon strong business model and capitalize on favorable macroeconomic trends. % 22 2012 net sales We will continue to build on our successful business model, which employs a regional approach with a global perspective. +20% +14% +13% 10-YEAR DILUTED EARNINGS PER SHARE 10-YEAR CASH FROM OPERATIONS 10-YEAR NET SALES COMPOUND ANNUAL GROWTH RATE COMPOUND ANNUAL GROWTH RATE COMPOUND ANNUAL GROWTH RATE EUROPE, MIDDLE EAST, AFRICA Growth opportunities in health and wellness and clean label in Europe. % 8 2012 net sales ASIA PACIFIC Strong potential for growth driven by population increases and consumer demand for convenience foods. % 13 2012 net sales LEGEND Global Headquarters Global Research and Manufacturing Location Development Headquarters SALES (Based on 2012 net sales) CONTENTS To Our Shareholders 2 Great Culture, Great Capabilities 4 Food 44% Great Products, Great Opportunities 6 Beverage 15% Financial Highlights 8 Animal Nutrition 12% Cumulative Total Return 69 Directors and Officers 70 Paper and Corrugating 9% Shareholder Information IBC Brewing 9% Other 11% Ingredion Incorporated 1 INGREDIENTS OF A GREAT COMPANY To Our Shareholders Ingredion delivered another strong year, highlighted by good financial performance, our successful name change, the successful completion of the integration of National Starch, and meaningful progress on many other strategic fronts. Looking back, 2012 marks the continuation of a critical A few other 2012 accomplishments stand out as period in our company’s evolution, building on our very particularly meaningful to me. First, as is evident from the strong history and positioning us for a successful future. name on the front of this report, we are now Ingredion, As the theme of this year’s annual report conveys, we a name that better reflects our business model and our firmly believe that Ingredion is a great company. product portfolio. The reception from our employees, cus- Starting with our performance in 2012, we are tomers, suppliers and investors has been quite positive. pleased to have performed well in the face of numerous A part of the name change involved the integration of macroeconomic headwinds, including country-specific National Starch, the largest acquisition in our company’s economic challenges, currency devaluations and higher history. The integration was successfully completed, on raw material prices. plan and on schedule, in 2012. National Starch has added Highlighting our performance was a 19 percent key innovation and marketing capability as well as addi- increase in adjusted diluted earnings per share in 2012.* tional portfolio breadth and geographic reach. We are very Our 10-year diluted earnings per share compound annual enthusiastic about the addition to our portfolio and the growth rate is 20 percent. opportunities afforded us by the additional scope. Cash from operations grew by over $400 million to In 2012, we achieved another record for safety, one $732 million, giving us ample liquidity to execute our growth of our core values. I firmly believe that a safe plant is a initiatives in the form of capital expenditures and potential well-managed plant. We strive every day to promote the acquisitions in the future. It also enabled us to increase our safety of all our workers at each location. To that end, quarterly dividend 30 percent to $0.26 per share, marking we continue to target and achieve world-class levels of the third increase in about an 18-month period. safety performance. * See page 69 of this Annual Report for a reconciliation of this metric, which is not calculated in accordance with GAAP to the reported diluted earnings per share. 2 Ingredion Incorporated As much as we enjoy sharing our success from the that follow, you will read about our culture and capabilities past year, I am equally enthusiastic about our prospects that underpin our plans, as well as the products and global for the future. Late in 2012, we updated the details of opportunities that excite our employees every day. our long-term goals. These include anticipated sales In closing, I want to recognize two officers who are growth of about $1.5 billion, taking us to approximately retiring from the company. Our General Counsel, Mary $8 billion in sales over the next five years. At the same Ann Hynes, and our Controller, Robin Kornmeyer, both time, operating margins are expected to expand, fueled have served the company for many years and made great by our relentless focus on operational excellence which contributions. We wish them well as they write the next enables us to work with low costs in an efficient and chapter of their lives. Board member Karen Hendricks will effective manner. We also expect our focus on innovation not stand for re-election per our Corporate Governance to help drive price and mix improvements while utilizing Principles as she has served for 12 years. On behalf of the our current asset base. Underpinning these efforts is our other board members and the employees of Ingredion, outstanding focus on safety, quality, financial and risk I want to thank her for her counsel and support over management as well as talent development. many years. We expect our strong cash flow and solid balance I would also like to thank our outstanding employees. sheet to further provide us with the ability to make We could not be the great company that we are without growth-oriented investments. These ultimately give us them as a rock-solid foundation. Thanks to our board of confidence in our expected 10–12 percent annualized directors for their continuing role in guiding and supporting earnings per share growth goals over the long term. the management of the company. And, finally, thanks to The true bottom line for the company is our steadfast our shareholders for your commitment and investment commitment to creating shareholder value and thus a real in Ingredion. focus on return on capital employed as an appropriate metric for decision making. We believe that with judicious deployment of our cash flow and a focus on our best growth opportunities, Ilene S. Gordon we can achieve these goals and continue the tremendous Chairman, President and Chief Executive Officer success that has come to define Ingredion. In the pages April 2, 2013 Ingredion Incorporated 3 INGREDIENTS OF A GREAT COMPANY Great Culture Great Capabilities Ingredion’s culture and world-class capabilities provide the foundation for being a great company. We maintain a keen focus on continuous improvement across the entire company as we consistently strive to reach new heights. Culture Ingredion’s great culture is a source of Capabilities Great capabilities are the natural both strength and pride. We are committed to outgrowth of a great culture. From operational six core values: safety, quality, integrity, respect, excellence to risk management to innovation excellence and innovation. Our values guide to talent management, Ingredion has developed our company and our employees. Over time and processes and programs that ensure high perform- with great discipline, these values have become ance and support our ability to grow over the long embedded in our culture and helped shape the term. Our risk management practices, for instance, company’s reputation among its constituents. have helped us weather raw material, foreign Ingredion is known as a company with a strong exchange and other macroeconomic challenges. and enviable culture. It is a company where people Our innovation capability is at the heart of devel- want to work. It is a place where employees strive oping on-trend products to meet the needs of to stay. It is communities that welcome our presence. customers and consumers in an ever-changing It is customers who trust us as partners. And it world while also providing us with the ability to is investors who understand that we are good participate in higher-margin opportunities. stewards of shareholder value. 4 Ingredion Incorporated Ingredion has developed a great culture built on capabilities like operational excellence and innovation. These capabilities have led to 1.0 strong results, including truly outstanding safety performance as total recordable incidence rates 1.02 have dramatically declined over time. 0.8 0.6 0.68 0.4 0.50 0.2 0.0 ’10 ’11 ’12 Total Recordable Incidence Rate (per 200,000 work hours) Ingredion Incorporated 5 INGREDIENTS OF A GREAT COMPANY Great Products Great Opportunities With a broad, diverse portfolio of starch and sweetener ingredient solutions, plus opportunities in emerging markets around the world and in support of many key consumer categories, Ingredion is well positioned to grow in the years to come. Products Ingredion’s product portfolio includes Opportunities At the confluence of a number a broad range of starch and sweetener ingredients of growth opportunities, Ingredion is very well that add functionality and value to our customers’ positioned to build on our culture, capabilities and products. Our products allow customers to modulate products.
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