Ingredion's plant is running again. Why is its profit outlook falling?

Ingredion's Argo plant is running steadily again. The earnings recovery is not keeping pace. The food-ingredient maker has cut its annual profit outlook as high manufacturing costs and softer demand eat into the benefits of restored production.

It now expects adjusted earnings of $9.25 to $9.70 a share for 2026, down from $10.30 to $10.90 in August. Third-quarter adjusted operating profit fell 19%, much worse than the mid-single-digit decline management had forecast.

Research by Ticker Byline shows that the midpoint of the annual adjusted earnings forecast has fallen about 11%. Both forecasts already reflected the sale of the majority stake in Ingredion's Pakistan business. The new cut therefore goes beyond that change in the business.

Our Ingredion company profile tracks its earnings, cash position and acquisition plans.

Production is back. The cost problem remains.

In August, Ingredion said Argo was operating at normal production rates across all major units. Now it says production has remained stable for a second consecutive quarter and inventories are largely rebuilt. The problem has shifted toward making those operations more profitable.

The U.S. and Canada ingredients business earned $52 million in segment operating profit in the third quarter, down from $81 million a year earlier. Higher manufacturing expenses at Argo and lower volumes outweighed better pricing and product mix.

Ingredion now expects that business's annual operating profit to fall 35% to 40%. The August forecast called for a 20% to 25% decline. Management is focusing on lowering operating costs and improving sales volumes.

More volume is not yet producing more profit

There were signs of demand strength elsewhere. Texture & Healthful Solutions, which supplies specialty ingredients, recorded its tenth consecutive quarter of sales-volume growth. Yet its segment operating profit fell to $95 million from $105 million as tapioca costs, manufacturing expenses and a less favorable sales mix offset that growth.

Latin American profit also declined despite stronger brewing and beverage volumes. Currency effects in Mexico and disruption from the August earthquake in Colombia added pressure. Argo does not explain every weakness in the quarter.

Group sales were $1.79 billion, compared with $1.82 billion a year earlier. Reported operating profit fell to $201 million from $249 million, and net income attributable to Ingredion fell to $142 million from $171 million. The adjusted operating-profit figure was $206 million, compared with $254 million.

The cash forecast moves lower too

Ingredion lowered its annual operating cash-flow forecast to $650 million to $750 million, from $700 million to $800 million. Planned capital spending remains $450 million to $490 million. That leaves less expected cash after the same investment budget.

The pending Tate & Lyle acquisition remains a separate project. For the existing business, the next test is whether stable production turns into lower unit costs and stronger earnings. Another quarter of reliable plant output alone would not answer that question.