Penford Corporation Posts Stale Earnings

posted stale second quarter fiscal 2013 earnings, finishing significantly below the Wall Street consensus. The Centennial, Colorado-based firm posted EPS of $0.10, up from a loss of $0.03 in Q2 FY 2012. However, it fell short of the $0.14 analysts hoped for. Revenue climbed over three percent to $89 million.

Penford's food ingredients division climbed 6.8 percent and finished with sales of $26.6 million during the quarter. The company attributed this to double-digit growth in sales of dairy, gluten-free and soups/sauces/gravies products. Over the first six months of fiscal 2013, the food ingredients division climbed by a nearly identical percentage, generating $54.3 million. Meanwhile, the starch manufacturer's industrial ingredients division grew nearly two percent to $62.4 million during the quarter. This was due to double-digit growth in corn starch sales as well as sales in the company's Carolina Starches business. The gain was partially offset by 25 percent lower ethanol sales. For the first six months, revenue in the industrial ingredients division rose 2.8 percent to $129.6 million.

, the global starch market is expected to grow to 133.5 metric tons by 2018. The growth is expected to be driven by the diversity and sheer number of end-use applications, as notes the research firm. Of particular note is that the starch market is expected to grow nine percent per year through 2018 in the Asia-Pacific region, driven by growing incomes in nations such as China and India, per the report.

In January,

Jefferies reiterated its Hold rating of Penford. According to the story, Jefferies analysts stated, “With ethanol margins less relevant as Penford shifts its mix in favor of industrial starches and bioproducts, Penford likely needs another couple of quarters of solid performance to shift to trading more in line with larger cap peers on 2014 earnings prospects.”

On March 25,

that John W. Bode was selected as president and CEO of the Corn Refiners Association (CRA). According to the report, Bode has held three Presidential appointments at the US Department of Agriculture and was responsible for about half of its budget. He also has 30 years of experience as a lawyer and lobbyist in Washington, as noted in the story. Thus, he has substantial experience and, likely, clout in the nation's capital, which will certainly benefit the CRA. Penford is one of six member companies in the Association.

Penford has closed in the $10-$11 range on all but one day since February 28. With its weak first quarter results, though, it wouldn't be a surprise to see it drop out of this range on Friday. Trading has not commenced on Penford's stock as of this writing.