Ingredion 2Q13 Guidance Update Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

Comments on Argentina

“As we’ve discussed for more than a year, the situation in South America has posed challenges, and our managers there have worked diligently to navigate a difficult environment. We have also consistently discussed with you that there was risk in Argentina, as the economy was unstable and could deteriorate rapidly. This concern has come to fruition. From a high-level view, Argentina has moved into a rather severe situation that has placed significant pressure on our results in the region. At the same time, the Brazilian economy continues to be somewhat stagnant and our sales to the brewing industry remain soft.”

“The cautionary comments on the year-end call and first quarter call, that if Argentina imploded, we could not hold the range, unfortunately, are playing out.”

“While we still maintain pricing power, limited pricing power in Argentina, it’s not enough to cover the rate of change in the cost structure. So for example, we were able to get about 1/3 of the cost increase covered with pricing, the other 2/3 we were not. So I think our systems are fine, it’s just the rate at which this deterioration occurred was fairly rapid.”

“In 2001 when Argentina blew up, it took us about 12 months to recover. And so if we follow the same pattern, then I would expect that, as we got through the second half of 2014, we see the cost pressures ease and we would see volume pick up.”

“It’s more a margin squeeze in Argentina. And it’s a combination of volume, which would be top line, in Brazil, along with the currency. So I would look at South America as a pretty significant margin squeeze. ”

“If I think about Argentina and what we’re seeing, let’s call it government policies, which is a bit broad, but I want to take it down to policies on the currency, control over dollars, what we would consider hyperinflation. The unofficial inflation rate is probably between 25% to 35%. And the way that this normalizes is that when the currency does blow and goes to, call it, the black market rate, so if we’re at, let’s call it, ARS 5.25 on the peso and it goes to, call it, ARS 8, then the currency control should start to ease, price control should start to ease, we see more economic activity and we see lower costs.”

[In Argentina] “Sure. I think it’s going to occur is that, as they go through their elections this fall, the pressure on the existing sitting government will be intense. There is — our belief is there’s a likelihood that the government will change. Currency will devalue, which will then make it easier to do business in Argentina because you will not have the price controls, you won’t have the distortion driven by the fact that you can’t get dollars and any dollars in order to buy energy. So I think that it’s really the change in government, a devaluation, and then we start to see economic activity pick up.”

Comments on Other Markets

“our business model is holding up in every region other than South America, where the environment is simply deteriorating too rapidly in the short term.”

“The story in North America is actually quite impressive. In spite of a historically severe drought and multiple years of pricing actions to account for rising corn costs, the region continues to deliver.”

“North America is also seeing a general slower-than-expected volume recovery. To be clear, we still expect the region to be flat to up for 2013, but we can’t rely on North America to offset the large negatives in South America. Both Asia Pacific and EMEA are trending largely as originally expected.”

[in North America] “And so with corn prices currently forecasted to be significantly lower than last year, as we head into the fourth quarter, if we do have this awesome crop come out as it’s predicted at the moment, then that should ease off on some of the pricing differential between sugar and HFCS, which would bode for a more stabilized market.”

Dow Chemical at Bernstein Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

” there has been an enormous amount of change in our sector probably as many as any sector out there in a context of the names that were there in 1990 and the names that are there in 2010 and even since 2010 has been further changed and I think to notice, there has been about a 40% survival rate, eight companies will come out on the other end which Dow is one.”

“chemistry and the material that comes from chemistry are foundational to everything we do”

“We’ve gotten out of me too businesses that subsidized companies can go win at…I can do a lot of things, I can’t get subsidies like…state owned companies”

“We have worked very hard to go downstream into markets and work at the intersection of sciences…material science, chemistry, biology, that’s where discoveries occurring in today’s world”

“BSF is the other one that’s most like us and DuPont little less like us these days that are integrated diversified across key markets’

“In our sector to be a player in all the sciences and the key markets with an integrated proposition on technologies, products and processes, is a domain of a few”

“I would remember meetings in the hotel rooms like this where the Chinese issue was over here trying to figure out whether the U.S. is going to be good on all the money that China had over here in terms of its banking system, financial system, that’s over with and the Chinese are quite happy to put money in the United States.”

“I think Europe was a big wakeup call for the Chinese and about a year or so ago there were transition in the leadership, they pretty much decided that they can no longer rely on an export led economy.”

“[China] fundamentally took a very profound decision with the new leadership…very focused in on trading demand drivers in China that solved China’s needs as an urbanized, modernized economy that looks after its people removes pollution, addresses food safety, addresses health concerns and really if you like distributes well in a much better way than what they’ve seen”

“I’m a China head, I’ve been going there since the 70s, I do six trips a year, I’ve lived through the remake of China. I think the profound remake of China is to move their economy to 70% or 80% domestic demand drivers…That means not the property speculative world they’ve seen that means not the bridge to nowhere type infrastructure builds that means sustain consumption and to do that they’re focusing it on the service sector.”

“they are creating insurance sectors, health sectors, pension based sectors if you like mutual funds or alternative uses of capital, trying to liberate liquidity inside their economy so smarter choices can be made on how capital is allocated”

“If we’re going to live in a deflationary world and volatile and China’s remake is on the worse end more than a year or two then the capacity is not required in the world.”

“These are short cycle based on consumers. I think our industry needs to get short cycle at the consumer end.”

Dupont Investor Day Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“DuPont is a market driven Science Company. And one way I visualize that, as the way we are as a company, is by parting our seven business segments across our three scientific areas. Material science, biosciences and agricultural sciences.”

“The operative message here is to connect and collaborate. Connect more directly to the local market and customers, and collaborate to solve problems.”

“To ensure that we’re investing our R&D dollars in the right places, our annual budget is based on a bottom-up, top-down approach. We run what we call a prioritization of initiatives, or POI process. Each business submits a POI plan to the office of the Chief Executive for the projects that they would most like to have funded. For funding purposes, we analyze these plans to determine which projects would generate the highest cash returns. One of my priorities as CFO, is to make sure that the wide financial rigor is in place to clearly understand all these opportunities that are being presented by each business and to ensure that we’re maximizing the value generated from the R&D investment. ”

“We’re a science company focused on addressing some the world’s toughest challenges including feeding the world, decreasing the dependence on fossil fuel and protecting people and the environment.”

“Our innovations are accelerated when we leverage global resources to local needs and bring market driven science through partnerships with our customers. To grow quickly innovation must be targeted and tailored to specific markets and regions.”

“Our ingredients make the bread fresher ice cream and cream cheese creamier yogurt healthier energy bars crunchier and jams and mayonnaise lower in calories. We are making people healthier and food safer and more affordable you will find our products in every second ice cream nutrition bar and specialty infant formulae in the world as well as in every third cheese and every fourth loaf of bread. Almost every meal you whether it is at home or in a restaurant contains our high quality food ingredients.”

Lyondell Basell Analyst Day Notes 3.13.13

This post is part of a series of posts called “Company Notes.”  These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.  The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call.  Other posts in this series can be found by clicking here.  Full transcripts can be found at Seeking Alpha.

“sustainable changes in supply/demand and therefore price environments of NGL, chemical chain…[will dominate our discussion]”

“exploration production companies enjoyed strong natural gas prices in 2008 — 2005 and 2008 on a full year basis, and that was the relative peak at least, in the current history. Next bubble is the midstream…MLPs…They have seen the peak of their value in 2007 and 2011…[the] chemical industry [has seen] decline into the trough of the cycle of ’08 and ’09…since ’09, it continuously coming up to the high end profit and so we are far from the peak of the cycle yet”

“when you look at $110 approximate oil out there and you’ve got $3.50 gas out there. Where do they meet? They meet in the export market, that’s where they meet, and that’s where we have competitive advantage. Going forward, if you look at it in 2008, and I really just touched upon that, overall this just highlights a little bit that we don’t think we’re in this up cycle. Yes, operating rates have been very high. Jim did show you what we’ve been operating close to 100%, which is great, and we believe that’s higher than where the industry’s at. But the industry as a whole has been running very high, in the upper 90s, mid to upper 90%. So really, when you look at it from a global standpoint, it’s really a tale of 2 cities. North America and the Middle East, 2 of the cost advantaged positions have done very well and have operated very well. If you try looking at Europe and Asia, not so well and those are the regions where our utilization rates have been somewhat anemic.”

“Sustainable U.S. ethane advantage is a great advantage. Everybody has the advantage. So what are we going to do to compete and be better than the next guy? So we’re executing cheaper, quicker. We’re going to capture that bubble. And as Jim said — I’m saying that lot because he’s right, we’re going to capture that and hopefully get these projects paid for before the other guys turn on the switch.”

“Polyethylene demand only grew by 1% from ’11 to ’12 in China. We’ve come to know Chinese demand growth for polyethylene to be at least at the pace with GDP, if not the multiple of GDP”

“We’ve shuttered 2.5 billion pounds of capacity in Europe.”

“You’ll see some LNG export happen. I suspect it will be fairly modest. I participated in LNG business in the past. And if you look at the global economics of that, as soon as methane prices start to rise a bit, you’ll see a production increase fairly rapidly in the dry gas plays, which will moderate that.”