Ingredion Q2 2025 slides: Healthful solutions drive margin growth despite sales dip

Introduction & Market Context

Ingredion Incorporated (NYSE:INGR) presented its second quarter 2025 earnings results on August 1, highlighting improved profitability despite a slight decline in overall sales. The ingredients solutions provider saw its stock rise 0.71% to $120.06 following the earnings release, as investors responded positively to the company’s expanding margins and strategic shift toward higher-value products.

The company continues to execute its transformation strategy, focusing on texture and healthful solutions while navigating economic challenges in Latin American markets and softer industrial starch demand in North America.

Quarterly Performance Highlights

Ingredion reported Q2 2025 net sales of $1.83 billion, representing a 2% decrease from $1.88 billion in the same period last year. Despite the sales decline, the company achieved a 1% increase in adjusted operating income, which rose to $273 million from $270 million in Q2 2024.

As shown in the following financial highlights chart, the company’s gross profit increased by 7% to $477 million, with gross profit margin expanding significantly by 230 basis points to 26.0%:

The company’s adjusted diluted earnings per share remained flat year-over-year at $2.87, while reported diluted EPS increased from $2.22 to $2.99. This improvement in profitability metrics despite lower sales volume demonstrates Ingredion’s successful focus on higher-margin product categories.

A detailed breakdown of the income statement reveals the company’s ability to maintain earnings growth despite revenue challenges:

Strategic Initiatives

Ingredion’s performance was driven by its strategic focus on Texture & Healthful Solutions (T&HS), which showed a 3% volume growth compared to declines in traditional segments. This segment benefited from strong clean label performance, with U.S./Canada clean label products growing by double digits and global strategic key accounts also showing double-digit growth.

The company’s segment performance clearly illustrates the diverging trajectories between its growth-focused T&HS business and its more traditional Food & Industrial Ingredients segments:

Ingredion has consistently improved its profitability over the past two years, with gross margins steadily climbing from 21.3% in Q2 2023 to 26.0% in Q2 2025, as illustrated in this chart:

The company attributes this success to consumer wellness preferences driving product reformulation, with label information being the #1 driver of consumer purchasing decisions. Ingredion’s leadership in clean label ingredients and its "better-for-you" innovation portfolio have positioned it favorably as these trends accelerate.

Detailed Financial Analysis

Breaking down performance by segment, Texture & Healthful Solutions delivered Q2 net sales of $599 million, up 2% from the prior year, with operating income increasing significantly to $111 million and operating margin expanding from 14.6% to 18.5%.

In contrast, Food & Industrial Ingredients—LATAM saw a 5% decrease in net sales to $596 million, though operating margin improved slightly to 21.3%. Food & Industrial Ingredients—US/CAN experienced a more challenging quarter with a 6% decline in net sales to $523 million and operating income dropping to $86 million.

The following chart provides a detailed comparison of the performance between the T&HS and LATAM segments:

On a year-to-date basis, Ingredion’s financial performance shows similar trends, with net sales down 3% to $3.65 billion but adjusted operating income up 12% to $546 million. Gross profit for the first half increased 9% to $943 million, with gross profit margin expanding by 290 basis points to 25.9%:

Forward-Looking Statements

For the full year 2025, Ingredion expects net sales to be flat compared to 2024, with adjusted operating income projected to increase by mid-single digits. The company maintained its adjusted EPS guidance of $11.10 to $11.60.

The company’s detailed outlook by segment and key financial metrics provides a clear roadmap for the remainder of the year:

Management expressed confidence in exceeding its $50 million run-rate savings target through cost competitiveness initiatives and committed to exceeding the $100 million share repurchase target for 2025. The company also highlighted its progress in sustainability, noting its recognition as a "Net Zero Leader" by Forbes.

CFO James Gray noted that the company is rebuilding inventories in Food & Industrial Ingredients—US/CAN to meet customer demand while navigating short-term macroeconomic headwinds in Latin America. Despite these challenges, the strong performance in Texture & Healthful Solutions is expected to continue driving overall growth.

CEO Jim Zallie emphasized the company’s long-term growth opportunities driven by customer interest in reformulation and health trends. "We are guided by our aspiration to be the go-to provider for texture and healthful solutions that make healthy taste better," Zallie stated during the earnings call.

With cash from operations projected at $825-$950 million for the full year and capital expenditures of approximately $400-$425 million, Ingredion remains well-positioned to fund its strategic initiatives while returning value to shareholders through dividends and share repurchases.

Full presentation:

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