Ingredion Incorporated Reports 2021 Results; Expects 7% to 9% Operating Income Growth for 2022

  • Fourth quarter 2021 reported and adjusted EPS* were $0.99 and $1.09, respectively, compared to fourth quarter 2020 reported and adjusted EPS of $1.70 and $1.75, respectively.
  • Full-year 2021 reported and adjusted EPS were $1.73 and $6.67, respectively, compared with $5.15 and $6.23 in the year-ago period, respectively. Reported results for full-year 2021 include a $340 million impairment charge related to the contribution of the Company’s Argentina operations to the Arcor joint venture.
  • The Company expects full-year 2022 adjusted EPS to be in the range of $6.85 to $7.45.

WESTCHESTER, Ill., Feb. 03, 2022 (GLOBE NEWSWIRE) — Ingredion Incorporated (NYSE: INGR), a leading global provider of ingredient solutions to the food and beverage manufacturing industry, today reported results for the fourth quarter of 2021 and full-year 2021. The results, reported in accordance with U.S. generally accepted accounting principles (“GAAP”) for 2021 and 2020, include items that are excluded from the non-GAAP financial measures that the Company presents.

“Our team executed well in 2021 in the face of persistent macroeconomic and global supply chain challenges. We advanced our Driving Growth Roadmap, while delivering solid net sales and profit growth. Partnering with our customers to co-create and meet their changing demand requirements, while implementing strategic pricing actions, and delivering cost savings through our Cost Smart program were major achievements that underpinned our success in 2021,” said Jim Zallie, Ingredion’s president and chief executive officer.

“In the fourth quarter, we delivered 10% net sales growth led by strong double-digit specialties growth. We continued to experience strong customer demand which heightened pressure on a constrained global supply chain. In the quarter, we encountered incremental supply chain costs as we made the decision to invest in service delivery to meet customer commitments.”

“For full-year 2021, net sales grew 15% to $6.9 billion reflecting over $600 million of price mix improvement. Our sales and pricing teams effectively managed price mix increases by demonstrating agility throughout the year as corn and input costs continued to fluctuate. Our specialties ingredients delivered high teens net sales growth led by gains in our texturants and sugar reduction platforms, and specialties now represent 33% of net sales,” stated Zallie.

“Looking to 2022, we expect strong net sales and operating profit growth. During contracting, our teams worked with customers to plan for their demand and implemented pricing to reflect input cost inflation. Within specialities, we are also anticipating another strong year of growth. Notably, PureCircle is entering 2022 with strong momentum, having finished 2021 with positive operating margins. While production ramp-up of plant-based-proteins has been slower than expected, 2021 sales doubled off of a modest base, and with a strong sales pipeline, we remain optimistic on our growth prospects,” continued Zallie.

“Through the many challenges we faced during an unpredictable year, our dedicated teams continued to execute on our strategic pillars with a particular focus on commercial excellence, doing their best to serve our customers. I am incredibly proud of our employees as they continue to engage each day to create lasting value for our stakeholders.”

*Adjusted diluted earnings per share (“adjusted EPS”), adjusted operating income, adjusted effective income tax rate and adjusted diluted weighted average common shares outstanding are non-GAAP financial measures. See section II of the Supplemental Financial Information entitled “Non-GAAP Information” following the Condensed Consolidated Financial Statements included in this news release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.

Diluted Earnings Per Share (EPS)

4Q20 4Q21 YTD20 YTD21
Reported EPS $1.70 $0.99 $5.15 $1.73
Impairment/Restructuring costs 0.62 0.28 1.11 0.53
Acquisition/Integration costs 0.04 0.01 0.13 0.10
Impairment*** 5.01
Tax items and other matters (0.61) (0.19) (0.16) (0.70)
Adjusted EPS** $1.75 $1.09 $6.23 $6.67

Estimated factors affecting changes in Reported and Adjusted EPS

4Q21 YTD21
Margin (0.90) (0.44)
Volume 0.09 0.53
Foreign exchange (0.03) 0.07
Other income 0.06 0.13
Total operating items $(0.78) $0.29
Other non-operating income 0.01
Financing costs 0.07 0.02
Shares outstanding (0.02)
Non-controlling interests
Tax rate 0.05 0.14
Total non-operating items $0.12 $0.15
Total items affecting EPS** $(0.66) $0.44

**Totals may not foot due to rounding
*** Full-year reported results reflect a $340 million net asset impairment charge related to the contribution of the Company’s Argentina operations to the Arcor joint venture.

Financial Highlights

  • At December 31, 2021, total debt and cash including short-term investments were $2.0 billion and $332 million, respectively, versus $2.2 billion and $665 million, respectively, at December 31, 2020. The decrease in total debt and cash was primarily due to the repayment of all outstanding borrowings under the term loan credit facility in the third quarter of 2021, partially offset by the net proceeds from commercial paper issuances.
  • Net financing costs for the fourth quarter were $16 million, down compared to the year-ago net financing costs, primarily driven by lower foreign exchange impacts in the period.
  • Reported and adjusted effective tax rates for the fourth quarter were 12.8 percent and 24.2 percent, respectively, compared to 18.9 percent and 27.1 percent, respectively, in the year-ago period. The decrease in reported tax rate resulted primarily from favorable judgments related to the treatment of interest and credits on indirect taxes in Brazil and inflation adjustments in Mexico. These items were partially offset by a change in value of the Mexican peso against the U.S. dollar.
  • Reported and adjusted effective tax rates for the full year were 49.6 percent and 25.6 percent, respectively, compared to 30.0 percent and 26.9 percent, respectively, in the prior year. The increase in reported tax rate resulted primarily from an impairment charge related to the Arcor joint venture in Argentina and change in mix of earnings.
  • Net capital expenditures for the full year were $300 million, down $40 million from the prior year.

Business Review

Total Ingredion

$ in millions 2020
Net Sales
FX
Impact
Volume Price mix 2021
Net Sales
% change % change
excl. FX
Fourth quarter 1,593 (24) 4 182 1,755 10% 12%
Full year 5,987 28 265 614 6,894 15% 15%


Reported Operating Income

$ in
millions
2020 FX
Impact
Business
Drivers
Acquisition /
Integration
Restructuring /
Impairment
Other 2021 %
change
%
change
excl.
FX
Fourth quarter 163 (2) (71) 1 27 (32) 86 (47)% (46)%
Full year 582 7 19 8 46 (352) 310 (47)% (48)%


Adjusted Operating Income

$ in millions 2020 FX Impact Business
Drivers
2021 % change % change
excl. FX
Fourth quarter 186 (2) (71) 113 (39)% (38)%
Full year 659 7 19 685 4% 3%


Net Sales

  • Fourth quarter and full-year net sales were up from 2020 periods, driven by strong price mix including the pass through of higher corn costs, and higher volumes, which also reflected PureCircle and KaTech results. Excluding foreign exchange impacts, net sales were up 12 percent and 15 percent for the quarter and full year, respectively.

Operating Income

  • Fourth quarter reported and adjusted operating income were $86 million and $113 million, respectively, a decrease of 47 percent and 39 percent, respectively, from the same period last year. The decrease in reported operating income was driven by higher corn and input costs, including higher costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities, and by Cost Smart-related restructuring costs. The decrease in adjusted operating income was driven by higher corn and input costs, including the costs associated with the ramp-up of plant-based protein operations. Excluding foreign exchange impacts, reported and adjusted operating income were down 46 percent and 38 percent, respectively, from the same period last year.
  • Full-year reported and adjusted operating income were $310 million and $685 million, respectively, a decrease of 47 percent and an increase of 4 percent, respectively, from the year-ago period. The decrease in reported operating income was primarily attributable to the net asset impairment charge related to the contribution of the Company’s Argentina assets to the Arcor joint venture. The increase in adjusted operating income was attributable to strong price mix and volume improvement that more than offset higher corn and input costs. Excluding foreign exchange impacts, reported and adjusted operating income were down 48 percent and up 3 percent, respectively, from the same period last year.
  • Fourth quarter reported operating income was lower than adjusted operating income by $27 million driven by Cost Smart-related restructuring costs.
  • Full-year reported operating income was lower than adjusted operating income by $375 million primarily due to the net asset impairment charge related to the contribution of the Company’s Argentina assets to the Arcor joint venture.

North America

Net Sales

$ in millions 2020
Net Sales
FX
Impact
Volume Price
mix
2021
Net Sales
% change % change
excl. FX
Fourth quarter 923 3 18 97 1,041 13% 12%
Full year 3,662 27 125 323 4,137 13% 12%


Segment Operating Income

$ in millions 2020 FX Impact Business
Drivers
2021 % change % change
excl. FX
Fourth quarter 129 1 (46) 84 (35)% (35)%
Full year 487 5 (5) 487 0% (1)%
  • Fourth quarter operating income was $84 million, a decrease of $45 million from the year-ago period. The decrease was driven by higher corn and input costs, including costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities, that more than offset our favorable price mix and higher volumes.
  • Full-year operating income was $487 million, flat from the prior year. The results were driven by favorable price mix and higher volumes that were fully offset by higher corn and input costs and ramp-up costs related to our plant-based protein operations in our South Sioux City and Vanscoy facilities.

South America

Net Sales

$ in millions 2020
Net Sales
FX
Impact
Volume Price
mix
2021
Net Sales
% change % change
excl. FX
Fourth quarter 276 (10) (67) 57 256 (7)% (4)%
Full year 919 (29) (69) 236 1,057 15% 18%


Segment Operating Income

$ in millions 2020 FX Impact Business
Drivers
2021 % change % change
excl. FX
Fourth quarter 44 (1) (13) 30 (32)% (29)%
Full year 112 (3) 29 138 23% 26%
  • Fourth quarter operating income was $30 million, a decrease of $14 million from the year-ago period. The decrease was driven by a tax benefit in the prior year, lower volumes and higher input costs, as well as the impact of Argentina hyperinflation moving from financing costs to be included in South America operating income as part of the equity method income of the Arcor joint venture. Excluding foreign exchange impacts, segment operating income was down 29 percent for the fourth quarter.
  • Full-year operating income was $138 million, an increase of $26 million from the prior year. The increase was driven by favorable price mix that more than offset higher corn and input costs. Excluding foreign exchange impacts, segment operating income was up 26 percent for the full year.

Asia-Pacific

Net Sales

$ in millions 2020
Net Sales
FX
Impact
Volume Price
mix
2021
Net Sales
% change % change
excl. FX
Fourth quarter 230 (11) 36 14 269 17% 22%
Full year 813 13 144 27 997 23% 21%


S
egment Operating Income

$ in millions 2020 FX Impact Business
Drivers
2021 % change % change
excl. FX
Fourth quarter 20 (1) (2) 17 (15)% (12)%
Full year 80 2 5 87 9% 7%
  • Fourth quarter operating income was $17 million, down $3 million from the year-ago period. The decrease was driven by higher raw material costs, partially offset by favorable price mix and improvement in PureCircle results, which reported positive operating income for the last three months of the year.
  • Full-year operating income was $87 million, an increase of $7 million from the prior year. The increase was driven by favorable price mix and year-over-year improvement in PureCircle results that more than offset higher raw material and input costs.

Europe, Middle East, and Africa (EMEA)

Net Sales

$ in millions 2020
Net Sales
FX
Impact
Volume Price
mix
2021
Net Sales
% change % change
excl. FX
Fourth quarter 164 (6) 17 14 189 15% 19%
Full year 593 17 65 28 703 19% 16%


Segment Operating Income

$ in millions 2020 FX Impact Business
Drivers
2021 % change % change
excl. FX
Fourth quarter 29 (1) (8) 20 (31)% (29)%
Full year 102 3 1 106 4% 1%
  • Fourth quarter operating income was $20 million, down $9 million from the year-ago period. The decrease was driven by higher manufacturing expenses, including utilities costs in Pakistan, that more than offset favorable price mix and higher volumes in Europe.
  • Full-year operating income was $106 million, an increase of $4 million from the prior year. The increase was largely attributable to favorable price mix in Pakistan and higher volumes in Europe.

Dividends and Share Repurchases

In 2021, Ingredion paid $172 million of dividends, or $2.57 per share, representing a 39 percent payout of adjusted EPS. Ingredion reviews its dividend and dividend payout as growth in adjusted EPS is realized. In addition, Ingredion repurchased $68 million of outstanding shares of common stock during the year, and has 5.1 million shares currently available under its authorized common stock repurchase program. Ingredion considers return of value to shareholders through cash dividends and share repurchases as part of its capital allocation strategy to support total shareholder return.

2022 FullYear Outlook

The Company expects full-year 2022 reported and adjusted EPS to be in the range of $6.85 to $7.45 compared to adjusted EPS of $6.67 in 2021. This expectation excludes acquisition-related integration and restructuring costs, as well as any potential impairment costs.

Compared with last year, the 2022 full-year outlook assumes: North America operating income is expected to be up high single-digits to low double-digits, driven by favorable price mix and higher operating margins in the second half of the year; South America operating income, including the impact of recording hyperinflation for the Argentina joint venture, is expected to be down low single-digits; Asia-Pacific operating income is expected to be up high single-digits driven by favorable price mix and higher volumes; EMEA operating income is expected to be up low single-digits driven by favorable price mix; and Corporate costs are expected to be flat. The Company expects full-year reported and adjusted operating income to be up 7 percent to 9 percent.

Cash from operations for the full-year is expected to be in the range of $600 million to $680 million, as the impact of the change in working capital on cash from operations experienced over the past two years is expected to normalize. Capital expenditures for the full-year are expected to be between $300 million and $335 million.

The Company expects a reported and adjusted effective tax rate of 27.0 percent to 28.5 percent.

Conference Call and Webcast Details

Ingredion will host a conference call on Thursday, February 3, 2022, at 8 a.m. Central Time / 9 a.m. Eastern Time, hosted by Jim Zallie, president and chief executive officer, and James Gray, executive vice president and chief financial officer. The call will be webcast in real time and can be accessed at https://ir.ingredionincorporated.com/events-and-presentations. The accompanying presentation will be accessible through the Company’s website, and available to download a few hours prior to the start of the call. A replay will be available for a limited time at: https://ir.ingredionincorporated.com/financial-information/quarterly-results.

About the Company

Ingredion Incorporated (NYSE: INGR), headquartered in the suburbs of Chicago, is a leading global ingredient solutions provider serving customers in more than 120 countries. With 2021 annual net sales of nearly $7 billion, the Company turns grains, fruits, vegetables and other plant-based materials into value-added ingredient solutions for the food, beverage, animal nutrition, brewing and industrial markets. With Ingredion’s Idea Labs® innovation centers around the world and approximately 12,000 employees, the Company co-creates with customers and fulfills its purpose of bringing the potential of people, nature and technology together to make life better. Visit ingredion.com for more information and the latest Company news.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends these forward-looking statements to be covered by the safe harbor provisions for such statements.

Forward-looking statements include, among others, the Company’s expectations for full-year 2022 adjusted EPS, reported and adjusted operating income, cash from operations, capital expenditures, and reported and adjusted effective tax rates, as well as the Company’s expectations regarding full-year 2022 segment operating income and other statements regarding the Company’s future prospects or financial condition, net sales, operating income, volumes, corporate costs, tax rates, capital expenditures, expenses or other financial items, any statements concerning the Company’s prospects or future operations, including management’s plans or strategies and objectives therefor, and any assumptions, expectations or beliefs underlying the foregoing.

These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “assume,” “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook,” “propels,” “opportunities,” “potential,” “provisional,” or other similar expressions or the negative thereof. All statements other than statements of historical facts in this news release or referred to in or incorporated by reference into this news release are “forward-looking statements.”

These statements are based on current circumstances or expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and beyond our control. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, investors are cautioned that no assurance can be given that our expectations will prove correct.

Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various factors, including the impact of COVID-19 on the demand for our products and our financial results; changing consumption preferences relating to high fructose corn syrup and other products we make; the effects of global economic conditions and the general political, economic, business, and market conditions that affect customers and consumers in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products, including, particularly, economic, currency, and political conditions in South America and economic and political conditions in Europe, and the impact these factors may have on our sales volumes, the pricing of our products and our ability to collect our receivables from customers; future financial performance of major industries which we serve and from which we derive a significant portion of our sales, including, without limitation, the food, beverage, animal nutrition, and brewing industries; the uncertainty of acceptance of products developed through genetic modification and biotechnology; our ability to develop or acquire new products and services at rates or of qualities sufficient to gain market acceptance; increased competitive and/or customer pressure in the corn-refining industry and related industries, including with respect to the markets and prices for our primary products and our co-products, particularly corn oil; the availability of raw materials, including potato starch, tapioca, gum Arabic, and the specific varieties of corn upon which some of our products are based, and our ability to pass along potential increases in the cost of corn or other raw materials to customers; energy costs and availability, including energy issues in Pakistan; our ability to contain costs, achieve budgets, and realize expected synergies, including with respect to our ability to complete planned maintenance and investment projects on time and on budget and realize expected savings under our Cost Smart program as well as with respect to freight and shipping costs; the behavior of financial and capital markets, including with respect to foreign currency fluctuations, fluctuations in interest and exchange rates and market volatility and the associated risks of hedging against such fluctuations; our ability to successfully identify and complete acquisitions or strategic alliances on favorable terms as well as our ability to successfully integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; operating difficulties at our manufacturing facilities; the impact of impairment charges on our goodwill or long-lived assets; changes in our tax rates or exposure to additional income tax liability; our ability to maintain satisfactory labor relations; the impact on our business of natural disasters, war, or similar acts of hostility, threats or acts of terrorism, the outbreak or continuation of pandemics such as COVID-19, or the occurrence of other significant events beyond our control; changes in government policy, law, or regulation and costs of legal compliance, including compliance with environmental regulation; potential effects of climate change; security breaches with respect to information technology systems, processes, and sites; our ability to raise funds at reasonable rates and other factors affecting our access to sufficient funds for future growth and expansion; volatility in the stock market and other factors that could adversely affect our stock price; risks affecting the continuation of our dividend policy; and our ability to maintain effective internal control over financial reporting.

Our forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these and other risks, see “Risk Factors” and other information included in our Annual Report on Form 10-K for the year ended December 31, 2020, and in our subsequent reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.

CONTACTS:
Investors:
Jason Payant, 708-551-2584
Media: Becca Hary, 708-551-2602

Ingredion Incorporated (“Ingredion”)
Consolidated Statements of Income
(Unaudited)
(in millions, except per share amounts) Three Months Ended
December 31,
Change % Year Ended
December 31,
Change %
2021 2020 2021 2020
Net sales $ 1,755 $ 1,593 10 % $ 6,894 $ 5,987 15 %
Cost of sales 1,465 1,241 5,563 4,715
Gross profit 290 352 (18 %) 1,331 1,272 5 %
Operating expenses 184 172 7 % 668 628 6 %
Other operating (income) (5 ) (35 ) (34 ) (31 )
Restructuring/impairment charges and related adjustments 25 52 387 93
Operating income 86 163 (47 %) 310 582 (47 %)
Financing costs 16 22 74 81
Other non-operating (income) (8 ) (2 ) (12 ) (5 )
Income before income taxes 78 143 (45 %) 248 506 (51 %)
Provision for income taxes 10 27 123 152
Net income 68 116 (41 %) 125 354 (65 %)
Less: Net income attributable to non-controlling interests 1 1 8 6
Net income attributable to Ingredion $ 67 $ 115 (42 %) $ 117 $ 348 (66 %)
Earnings per common share attributable to Ingredion
common shareholders:
Weighted average common shares outstanding:
Basic 66.8 67.2 67.1 67.2
Diluted 67.6 67.6 67.8 67.6
Earnings per common share of Ingredion:
Basic $1.00 $1.71 (42 %) $1.74 $5.18 (66 %)
Diluted $0.99 $1.70 (42 %) $1.73 $5.15 (66 %)

 

Ingredion Incorporated (“Ingredion”)
Consolidated Balance Sheets
(in millions, except share and per share amounts) December 31, 2021 December 31, 2020
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 328 $ 665
Short-term investments 4
Accounts receivable – net 1,130 1,011
Inventories 1,172 917
Prepaid expenses 63 54
Total current assets 2,697 2,647
Property, plant and equipment – net 2,423 2,455
Intangible assets – net 1,348 1,346
Other assets 531 410
Total assets $ 6,999 $ 6,858
Liabilities and equity
Current liabilities
Short-term borrowings 308 $ 438
Accounts payable and accrued liabilities 1,204 1,020
Total current liabilities 1,512 1,458
Long-term debt 1,738 1,748
Other non-current liabilities 524 580
Total liabilities 3,774 3,786
Share-based payments subject to redemption 36 30
Redeemable non-controlling interests 71 70
Equity
Ingredion stockholders’ equity:
Preferred stock – authorized 25,000,000 shares – $0.01 par value, none issued
Common stock – authorized 200,000,000 shares – $0.01 par value, 77,810,875
shares issued at December 31, 2021 and December 31, 2020 1 1
Additional paid-in capital 1,158 1,150
Less: Treasury stock (common stock; 11,154,203 and 10,795,346 shares at
December 31, 2021 and December 31, 2020, respectively) at cost (1,061 ) (1,024 )
Accumulated other comprehensive loss (897 ) (1,133 )
Retained earnings 3,899 3,957
Total Ingredion stockholders’ equity 3,100 2,951
Non-redeemable non-controlling interests 18 21
Total equity 3,118 2,972
Total liabilities and equity $ 6,999 $ 6,858

 

Ingredion Incorporated (“Ingredion”)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Year Ended
December 31,
(in millions) 2021 2020
Cash provided by operating activities:
Net income $ 125 $ 354
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 220 213
Mechanical stores expense 55 54
Impairment on disposition of assets 340
Deferred income taxes (61 ) (7 )
Margin accounts (32 ) 43
Changes in other trade working capital (248 ) 107
Other (7 ) 65
Cash provided by operating activities 392 829
Cash used for investing activities:
Capital expenditures and mechanical stores purchases (300 ) (340 )
Proceeds from disposal of manufacturing facilities and properties 18 7
Payments for acquisitions, net of cash acquired (40 ) (236 )
Other (13 ) (2 )
Cash used for investing activities (335 ) (571 )
Cash (used for) provided by financing activities:
(Payments on) proceeds from borrowings, net (390 ) 326
Commercial paper borrowings, net 250
Debt issuance costs (9 )
(Repurchases) issuances of common stock, net (49 ) 4
Dividends paid, including to non-controlling interests (184 ) (178 )
Cash (used for) provided by financing activities (373 ) 143
Effect of foreign exchange rate changes on cash (21 )
(Decrease) increase in cash and cash equivalents (337 ) 401
Cash and cash equivalents, beginning of period 665 264
Cash and cash equivalents, end of period $ 328 $ 665
Ingredion Incorporated (“Ingredion”)
Supplemental Financial Information
(Unaudited)
I. Geographic Information of Net Sales and Operating Income
(in millions, except for percentages) Three Months Ended
December 31,
Change Year Ended
December 31,
Change Change
2021 2020 Change Excl. FX 2021 2020 % Excl. FX
Net Sales
  North America $ 1,041 $ 923 13 % 12 % $ 4,137 $ 3,662 13 % 12 %
  South America 256 276 (7 %) (4 %) 1,057 919 15 % 18 %
  Asia-Pacific 269 230 17 % 22 % 997 813 23 % 21 %
  EMEA 189 164 15 % 19 % 703 593 19 % 16 %
 Total Net Sales $ 1,755 $ 1,593 10 % 12 % $ 6,894 $ 5,987 15 % 15 %
Operating Income
  North America $ 84 $ 129 (35 %) (35 %) $ 487 $ 487 0 % (1 %)
  South America 30 44 (32 %) (29 %) 138 112 23 % 26 %
  Asia-Pacific 17 20 (15 %) (12 %) 87 80 9 % 7 %
  EMEA 20 29 (31 %) (29 %) 106 102 4 % 1 %
  Corporate (38 ) (36 ) (6 %) (6 %) (133 ) (122 ) (9 %) (9 %)
Sub-total 113 186 (39 %) (38 %) 685 659 4 % 3 %
Acquisition/integration costs (2 ) (3 ) (3 ) (11 )
Restructuring/impairment charges (25 ) (52 ) (47 ) (93 )
Impairment on disposition of assets (340 )
Other matters 32 15 27
Total Operating Income $ 86 $ 163 (47 %) (46 %) $ 310 $ 582 (47 %) (48 %)

II. Non-GAAP Information

To supplement the consolidated financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we use non-GAAP historical financial measures, which exclude certain GAAP items such as acquisition and integration costs, restructuring and impairment costs, Mexico tax provision (benefit), and certain other special items. We generally use the term “adjusted” when referring to these non-GAAP amounts.

Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of our operating results and trends for the periods presented. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to similarly titled measures presented by other companies. A reconciliation of each non-GAAP financial measure to the most comparable GAAP measure is provided in the tables below.

Ingredion Incorporated (“Ingredion”)
Reconciliation of GAAP Net Income attributable to Ingredion and Diluted Earnings Per Share (“EPS”) to
Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS
(Unaudited)
Three Months Ended Three Months Ended Year Ended Year Ended
December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
(in millions) Diluted EPS (in millions) Diluted EPS (in millions) Diluted EPS (in millions) Diluted EPS
Net income attributable to Ingredion $ 67 $ 0.99 $ 115 $ 1.70 $ 117 $ 1.73 $ 348 $ 5.15
Add back:
Acquisition/integration costs, net of income tax benefit of $1 million and income tax expense of $3 million for the three months and year ended December 31, 2021, respectively, and net of income tax benefit of $ – million and $2 million for the three months and year ended December 31, 2020, respectively (i) 1 0.01 3 0.04 7 0.10 9 0.13
Restructuring/impairment charges, net of income tax benefit of $6 million and $11 million for the three months and year ended December 31, 2021, respectively, and $11 million and $18 million for the three months and year ended December 31, 2020, respectively (ii) 19 0.28 41 0.62 36 0.53 75 1.11
Impairment on disposition of assets, net of $ – million of income tax benefit for the three months and year ended December 31, 2021 (iii) 340 5.01
Other matters, inclusive of income tax benefit of $12 and $7 million for the three months and year ended December 31, 2021, respectively, and net of income tax expense of $9 million and $10 million for the three months and year ended December 31, 2020, respectively (iv) (12 ) (0.18 ) (25 ) (0.38 ) (22 ) (0.32 ) (16 ) (0.24 )
Fair value adjustments to equity investments, net of income tax expense of $1 for the three months and year ended December 31, 2021 (v) (5 ) (0.07 ) (5 ) (0.07 )
Tax provision (benefit) – Mexico (vi) 2 0.03 (13 ) (0.19 ) 6 0.09 3 0.04
Other tax matters (vii) 2 0.03 (3 ) (0.04 ) (27 ) (0.40 ) 3 0.04
Non-GAAP adjusted net income attributable to Ingredion $ 74 $ 1.09 $ 118 $ 1.75 $ 452 $ 6.67 $ 422 $ 6.23
Net income, EPS and tax rates may not foot or recalculate due to rounding.

Notes

(i) During the three months and year ended December 31, 2021, the Company recorded pre-tax charges of $2 million and $3 million, respectively, of acquisition and integration costs for our acquisitions of PureCircle, KaTech and Verdient Foods businesses, as well as investments with Amyris and Arcor joint ventures.

(ii) During the three months ended December 31, 2021, the Company recorded $25 million of pre-tax restructuring-related charges. These costs consisted of $21 million of restructuring-related charges primarily in North America as a part of its Cost Smart Cost of sales program. During the year ended December 31, 2021, the Company recorded $47 million of net pre-tax restructuring-related charges, consisting of $17 million of employee-related and other costs, associated with its Cost Smart SG&A program and $27 million of net charges as part of its Cost Smart Cost of sales program.

During the three months and year ended December 31, 2020, the Company recorded $52 million and $93 million, respectively, of pre-tax restructuring and impairment charges, which included a $35 million impairment charge in the fourth quarter of 2020 for a TIC Gum intangible asset and $48 million of pre-tax restructuring charges, consisting of $25 million of employee-related and other costs, associated with its Cost Smart SG&A program and $23 million of restructuring related expenses primarily in North America and APAC as part of its Cost Smart Cost of sales program.

(iii) During the year ended December 31, 2021, the Company recorded a $340 million net asset impairment charge related to the contribution of the Company’s Argentina operations to the Arcor joint venture, which primarily consisted of $311 million for cumulative foreign translation losses related to the contributed net assets.

(iv) During the year ended December 31, 2021, the Company recorded a pre-tax benefit of $15 million related to a Brazil indirect tax matter. In May 2021, the Brazilian Supreme Court issued a ruling that affirmed lower court rulings that the Company is entitled to certain indirect tax credits.

During the three months and year ended December 31, 2020, the Company recorded a pre-tax benefit of $35 million related to the Brazil indirect tax matter. This benefit was partly offset by other nonrecurring charges related to an acquisition, weather event, and early extinguishment of debt.

(v) During the three months and year ended December 31, 2021, the Company recorded a net pre-tax fair value adjustment of $6 million to its equity investments.

(vi) The Company recorded a tax provision of $2 million and $6 million for the three months and year ended December 31, 2021, respectively, as a result of the movement of the Mexican peso against the U.S. dollar during the periods. The Company recorded a tax benefit of $13 million and a tax provision of $3 million for the three months and year ended December 31, 2020, respectively, as a result of the movement of the Mexican peso against the U.S. dollar and its impact to the remeasurement of the Company’s Mexico financial statements.

(vii) This item relates to the reversal of tax liabilities related to certain unremitted earnings from foreign subsidiaries, tax adjustments for an intercompany reorganization, and tax effects of the above non-GAAP addbacks.

Ingredion Incorporated (“Ingredion”) 
Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income 
(Unaudited) 
       
 
  Three Months Ended Year Ended
December 31, December 31,
(in millions, pre-tax) 2021 2020 2021 2020
Operating income $              86 $            163 $            310 $            582
Add back:
Acquisition/integration costs (i) 2 3 3 11
Restructuring/impairment charges (ii) 25 52 47 93
Impairment on disposition of assets (iii) 340
Other matters (iv) (32) (15) (27)
Non-GAAP adjusted operating income $            113 $            186 $            685 $            659
           
For notes (i) through (iv), see notes (i) through (iv) included in the Reconciliation of GAAP Net Income attributable to Ingredion and Diluted EPS to Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS.

 

II. Non-GAAP Information (continued)
Ingredion Incorporated (“Ingredion”)
Reconciliation of GAAP Effective Income Tax Rate to Non-GAAP Adjusted Effective Income Tax Rate
(Unaudited)
Three Months Ended December 31, 2021 Year Ended December 31, 2021
Income before Provision for Effective Income Income before Provision for Effective Income
(in millions) Income Taxes (a) Income Taxes (b) Tax Rate (b / a) Income Taxes (a) Income Taxes (b) Tax Rate (b / a)
As Reported $ 78 $ 10 12.8 % $ 248 $ 123 49.6 %
Add back:
Acquisition/integration costs (i) 2 1 3 (3 )
Restructuring/impairment charges (ii) 25 6 47 11
Impairment on disposition of assets (iii) 340
Other matters (iv) 12 (15 ) 7
Fair value adjustments to equity investments (v) (6 ) (1 ) (6 ) (1 )
Tax item – Mexico (vi) (2 ) (6 )
Other tax matters (vii) (2 ) 27
Adjusted Non-GAAP $ 99 $ 24 24.2 % $ 617 $ 158 25.6 %
Three Months Ended December 31, 2020 Year Ended December 31, 2020
Income before Provision for Effective Income Income before Provision for Effective Income
(in millions) Income Taxes (a) Income Taxes (b) Tax Rate (b / a) Income Taxes (a) Income Taxes (b) Tax Rate (b / a)
As Reported $ 143 $ 27 18.9 % $ 506 $ 152 30.0 %
Add back:
Acquisition/integration costs (i) 3 11 2
Restructuring/impairment charges (ii) 52 11 93 18
Other matters (iv) (32 ) (9 ) (22 ) (8 )
Tax item – Mexico (vi) 13 (3 )
Other tax matters (vii) 3 (3 )
Adjusted Non-GAAP $ 166 $ 45 27.1 % $ 588 $ 158 26.9 %
For notes (i) through (vii), see notes (i) through (vii) included in the Reconciliation of GAAP Net Income attributable to Ingredion and Diluted EPS to Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS.

Cambodia Says Myanmar Junta’s Foreign Minister Not Invited to Upcoming ASEAN Meeting

Cambodia, the incumbent chair of the Association of Southeast Asian Nations, says the Myanmar Junta’s Foreign Minister Wunna Maung Lwin will not be invited to attend the 10-nation bloc’s top diplomatic gathering in Phnom Penh this month.

 

“Since there is little progress in the implementation of the 5-Point Consensus, ASEAN member states find it hard to reach a consensus to invite Myanmar SAC’s foreign minister to participate in the Retreat,” Cambodian Foreign Ministry Spokesperson Chum Sounry told VOA Khmer on Wednesday, using an acronym of the Myanmar junta’s official name State Administration Council.

 

“Thus, we have asked Myanmar to send a non-political representative instead,” Chum Sounry said.

 

The gathering, known officially as the ASEAN Foreign Ministers’ Retreat, is one of the regional grouping’s most prominent annual meetings. It is scheduled to take place in Phnom Penh on February 16-17.

The decision by Phnom Penh not to invite the junta’s foreign minister indicates a reversal by Prime Minister Hun Sen’s government following his engagement in recent months with Myanmar’s coup-making generals – which included a visit to Naypyidaw – and after it had met resistance from fellow ASEAN member states, including Indonesia, Malaysia, and Singapore.

 

Amid disagreement in early January, Cambodia decided to postpone the retreat that originally was set to be held January 18-19 in the northern town of Siem Reap.

 

Hun Sen said earlier that he wanted to restore the ASEAN-10 instead of the continued ban of the Myanmar junta.

 

“We encourage Myanmar to be presen[t] at the Retreat at a non-political level rather than leaving the seat empty. It is up to Myanmar to decide who that “non-political level” would be,” Chum Sounry said.

 

In subsequent calls with his ASEAN counterparts in January, Hun Sen firstly acknowledged the existence of the National Unity Government – Myanmar’s government in exile – and started raising the bar for the Myanmar Junta to show “progress” in implementing the bloc’s five-point consensus to be able to attend ASEAN’s political-level meetings.

 

Chum Sounry also clarified what can be regarded as “progress” in this context.

 

“When we talk about progress in the implementation of the 5PC, we wish to see more commitment from Myanmar and others to end violence through a ceasefire agreement, to kick-start a dialogue process that involved all parties concerned and to allow access to political detainees, and to enable and facilitate access of humanitarian assistance to those in need, etc.,” Chum Sounry said.

Cambodian Institute for Cooperation and Peace’s research fellow Vann Bunna said the move shows the limits of Cambodia’s earlier maverick policy to engage Myanmar military regime in the face of opposition from the “more influential” ASEAN member states.

 

“Cambodia is doing so because it knows that if it continues to push for an inclusion of Myanmar junta’s foreign minister it will not be possible to hold any ASEAN foreign ministers’ meeting,” Vann Bunna said.

 

Vann Bunna said the Cambodian government seems to have decided at this time that the interests in staying with other ASEAN member states outweighed the efforts to build trust and good relations with the Myanmar junta, which he deemed as unreliable, noting the junta violated the ceasefire it promised with Hun Sen during the latter’s Myanmar trip in early January.

 

Other main regional actors, including the ASEAN secretariat and Indonesian Embassy in Phnom Penh, have not immediately responded on Wednesday to VOA’s request for comment.

 

In an interview with VOA Khmer on Wednesday, U.S. Embassy Phnom Penh’s political chief Jonathan Turley renewed U.S. calls for Cambodia to “hold the Burmese military regime accountable.”

 

“We urge Cambodia as ASEAN chair to continue to press for the implementation of the five-point [consensus] and to ensure that any visit [to Myanmar] by the ASEAN special envoy includes meeting with all partners,” Turley said.

 

It was one year ago this week that the Myanmar military establishment Tatmadaw’s chief Senior General Min Aung Hlaing overruled the reelection of Aung San Suu Kyi’s National League for Democracy government and launched a coup. Activists have said the post-coup bloodshed and violence has claimed more than 1,500 lives.

 

 

Source: Voice of America

Beijing Olympics Bubble Offers Rare, Temporary Oasis of Media Freedom

Journalists at the Beijing Olympics have a tough assignment. Not only do they face a vast number of pandemic-related restrictions, they also will be working in one of the world’s least friendly countries for media.

 

Amid concerns about China’s surveillance and mistreatment of the press, many journalists at the Winter Games tell VOA they are using “burner” devices, such as phones and laptops completely wiped of personal data, to protect their digital privacy.

 

“I set up a burner computer … I have a burner phone. I even have a burner iPad with me,” said James Griffiths, Asia Correspondent for The Globe and Mail, a Canadian newspaper. “I haven’t come across anyone who isn’t using at least some kind of burner device.”

Ahead of the Winter Olympics, the Committee to Protect Journalists warned that reporters’ phones and laptops could be contaminated with malware while in China. “Assume that everything you do online will be monitored,” read a CPJ advisory.

 

China ranked 177th out of 180 in Reporters Without Borders’ 2021 World Press Freedom Index, only two places above North Korea. Not only does the country employ an army of censors to maintain its so-called “Great Firewall,” it is also the world’s largest jailer of journalists, with at least 128 detained, the organization said.

 

Earlier this week, the Foreign Correspondents’ Club of China released a report warning media freedom in the country is declining at “breakneck speed.” It said China-based foreign reporters faced physical assaults, cyber hacking, visa denials, and growing threats of legal action.

A bubble tradeoff

 

Foreign journalists at the Beijing Olympics have reported no problems so far, even if they have extremely limited mobility due to COVID-19 precautions.

 

“I’m currently connected to the Beijing 2022 Internet, which you can get across the various venues and as far as we can tell it’s completely uncensored. I don’t know how monitored it might be, of course, but at least things aren’t blocked,” said Griffiths.

 

“They said they were going to do this, and they have delivered. But then of course, we’re in a bubble,” he added.

 

Reporters at the Beijing Olympics won’t see much of China at all. Instead, they’ll be in a closed loop, taking only official buses from venue to venue. It’s part of China’s “zero-COVID” strategy, which has attempted to eliminate COVID-19, despite the emergence of the highly transmissible omicron variant.

 

The restrictions have made journalism more difficult, in certain respects.

 

“It’s really hard to get a feel for what these Games mean to the people here in Beijing, because the only person you could really ask is a member of the workforce or a volunteer. Trying to report on what’s happening outside the closed loop is not an option,” said Donna Spencer, a sports reporter for The Canadian Press news agency.

 

Spencer says she, too, brought “clean” laptops and phones to Beijing and is using virtual private networks, or VPNs, which can provide a degree of privacy for Internet connections. So far, she says she’s experienced no problems.

 

“It’s this very weird sort of juxtaposition. We are free to report — within the closed loop,” she said.

 

The only way in

 

The conditions may not be ideal, but for many journalists it was the only way to get back into China, said Eryk Bagshaw, North Asia correspondent for The Sydney Morning Herald.

 

“The Olympics presented an opportunity that we may not get again,” said Bagshaw, who also brought clean laptops, phones, and even new email addresses to Beijing.

 

In recent years, Beijing has delayed or refused the issuance of visas for foreign journalists. However, many journalists at the Beijing Games were issued visas through the International Olympics Committee.

 

But Bagshaw conceded that the bubble has greatly simplified reporting in China — for better and for worse.

 

“You’re essentially submitting yourself to such total surveillance that there’s almost freedom in that,” he said. “There’s cameras absolutely everywhere — you’re not looking over your shoulder wondering if you’re being tailed because you’re speaking to a Chinese dissident.”

 

Source: Voice of America

Experts: Sanctions Against Myanmar Not Enough to Bring About Change

Sanctions imposed on Myanmar officials aren’t enough to force change within the conflict-torn country, experts say.

 

This week, Britain, Canada and the United States imposed targeted sanctions on officials, coinciding with the anniversary of the coup that toppled Myanmar’s democratically elected government on Feb. 1, 2021.

 

Those sanctioned include Union Attorney General Thida Oo, Supreme Court Chief Justice Tun Tun Oo, along with Tin Oo, the chairman of the Anti-Corruption Commission and U Thein Soe, a former military general who was appointed the chair of Myanmar’s election commission following the coup.

 

Myanmar’s Ministry of Foreign Affairs on Thursday decried “interference in internal affairs.”

The latest sanctions aren’t enough to upset the junta, according to Ben Hardman, a Myanmar legal and policy adviser based in Chiang Mai, Thailand, with the non-profit EarthRights International.

 

“When a country like the U.S. sanctions a person or company, it generally means that their U.S. assets are blocked and that people or companies in the U.S. cannot do business with them. So, sanctions may have very little impact on individuals in Myanmar that do not have interests outside of the country,” Hardman told VOA.

 

“These latest sanctions add to the pressure on the junta, but these are small straws that will not break the camel’s back any time soon,” he added.

 

After the military removed the democratically elected government last year, ousted politicians formed the National Unity Government or NUG, maintaining they are the legitimate leaders of Myanmar.

 

Tung Aung Shwe, the NUG’s representative to Australia, told VOA the latest sanctions are welcome but more must be forthcoming to deal a real blow to the junta.

 

“It is very welcome to hear the announcements of the U.K., U.S. and Canadian governments for their additional targeted sanctions on some members and associates of the Myanmar military junta,” Tun Aung Shwe said.

 

“It is imperative that sanctions be imposed on the junta’s Ministry of Oil, Gas and Energy (MoGE), the main source of revenue for its military power to suppress the people of Myanmar,” he added.

 

Since the coup, Myanmar’s economy has collapsed. The World Bank had forecast that Myanmar’s GDP would see an 18% drop in 2021, while Fitch Solutions, a U.S. credit rating agency, predicted Myanmar would suffer a 4.4% contraction for 2022.

 

Amid the economic decline, Myanmar relies more heavily on income from vital offshore projects that produce and export natural gas. Major investors have included Chevron Corp. of the U.S. and Myanma State Oil and Gas Enterprise (MOGE), of Myanmar.

 

Gas projects are expected to account for $1.4 billion, or slightly more than 10% of Myanmar’s total revenue in 2022, according to the Myanmar Now news service.

 

Last month, Chevron and French oil firm TotalEnergies announced they will pull out of Myanmar’s main offshore gas field, citing the coup. International attention has now turned to more targeted sanctions on MOGE.

Khin Ohmar, a veteran pro-democracy activist and founder of Progressive Voice, a human rights organization, urges more interruption of the junta’s income streams.

 

“The only income in terms of hard currency that the military junta can still collect is natural resource revenues, particularly from oil and gas. The junta and its affiliated companies will not be able to sustain the brutal terror campaign against the population without the financial power that these revenues provide,” she said.

 

“We particularly need President Biden and President Macron to impose sanctions on the Myanma Oil and Gas Enterprise to stop oil and gas revenues from flowing to the junta,” she added, referring to U.S. President Joe Biden and French President Emmanuel Macron.

 

Although Myanmar has suffered decades of fighting with ethnic armed organizations, the junta is now involved in daily fighting with the country’s growing People Defense Forces, as thousands of anti-coup protesters have taken up arms to resist the military government. The PDF is the armed wing of the National Unity Government.

 

Widespread protests against military rule have been met violently by junta forces. According to the Assistance Association for Political Prisoners, a non-profit monitoring group based in Thailand, at least 1,510 people have been killed by the military.

 

U.N. human rights chief Michelle Bachelet recently told the BBC that the conflict in Myanmar, also known as Burma, should now be termed a civil war. She called on the U.N. Security Council to take “stronger action” to pressure the military to restore democracy.

 

Cambodian Foreign Minister Prak Sokhonn last month acknowledged the situation has “all the ingredients” for civil war. Prak Sokhonn is also ASEAN’s special envoy to Myanmar, ASEAN being the Association of Southeast Asian Nations.

 

The 10-member grouping agreed in April to a “five-point consensus” aimed at halting the deteriorating conditions in Myanmar. Little progress has been made as the military continues to suppress dissent.

 

Khin Ohmar said the ASEAN effort has been “pointless” thus far.

 

“The situation in Myanmar clearly poses a threat to international peace and security, yet the West continues to default to ASEAN’s role and its so-called five-point consensus, or ‘five-pointless consensus’ as we call it. The more the international community waits, the more emboldened the junta will become as it escalates its crimes against humanity and war crimes,” she said.

 

The military government said Thursday it is “committed” to peace, stability and the interests of its people in accordance with the five-point plan. The junta also rejected what it termed as statements that interfere in the country’s internal affairs.

 

The U.N.’s special envoy to Myanmar, Noeleen Heyzer, is still hoping for a cease-fire from all parties. In a recent interview with Channel News Asia, she said the anti-military opposition must negotiate a power-sharing agreement to fix Myanmar’s current political and human rights crisis.

 

But 247 Myanmar civil society organizations have sharply rebuffed the possibility of a coalition. A joint statement said the special envoy must “understand the root causes of the current crisis and genuinely listen to the calls of the people.”

 

Myanmar gained independence in 1948 from Britain, but for most of its modern history has been under military rule.

 

In the November 2020 general elections, the military claimed widespread electoral fraud, without evidence. The coup saw the democratically elected government removed with its leader Aung San Suu Kyi and President Win Myint detained and sentenced to multiple prison terms.

 

Source: Voice of America

Philippine Cruise Missiles Deal Signals Pushback Against China

Philippines leaders are moving to purchase sophisticated anti-ship cruise missiles in what analysts see as a sign of new resolve to stand up to China in a maritime dispute and to pivot further toward Manila’s traditional ally, the United States.

 

The Philippines made deals in January to acquire BrahMos missiles from a Russian-Indian joint venture. The move follows Manila’s July 2021 consent to sustain a U.S. visiting forces agreement, which allows for arms sales, intelligence sharing and U.S. troops’ access to Philippine soil for military exercises.

 

The Philippines is a part of a network of pro-U.S. countries in East Asia, but President Rodrigo Duterte challenged the U.S. alliance in 2016 by pursuing friendly ties with Asian superpower China, which he lauded while criticizing U.S. influence in his country. A series of territorial disputes in the South China Sea have cooled Duterte’s overtures over the past four years.

“He doesn’t like slights to his authority, slights to his ego and slights to Philippine sovereignty, and he’s faced that,” said Carl Thayer, emeritus professor of politics at the University of New South Wales in Australia. “And so, I think his legacy in his mind — ‘we stood up to the United States in the beginning and then it didn’t work with China’ — and so he’s punishing them.”

 

Missile orders

 

BrahMos Aerospace Private Ltd. announced the signing of its contract with the Philippine Department of National Defense in a terse January 28 press release on its website.

 

Manila’s state-run Philippine News Agency reported a week previously that the deal was worth $375 million and that two batteries would be available to the Philippine army for coastal defense missions.

 

Experts say the Philippines’ armed forces, which set out eight years ago to modernize at sea, would likely use the missiles to deter Beijing’s use of coast guard, naval and fishing vessels in the South China Sea west of Luzon Island and south of Hong Kong, experts say.

 

“In a conflict situation, they would be used to attack vessels at sea, and in the context of the Philippines, it would be more useful in controlling the movement of ships into or out of the South China Sea,” said Jay Batongbacal, international maritime affairs professor at the University of the Philippines in Quezon City.

 

BrahMos missiles have a 290-kilometer range and are designed to travel about three and a half times faster than the American subsonic Harpoon cruise missile. The Philippines is the first non-Indian buyer of the missile systems, Stockholm International Peace Research Institute data indicate.

 

Old dispute, new chill

 

Chinese officials point to documents dating back to dynastic times as support for their claim to about 90% of the 3.5 million-square-kilometer South China Sea, while the Philippines rejects China’s claim by citing a United Nations Convention on Law of the Sea. Brunei, Malaysia, Taiwan and Vietnam claim all or parts of the sea, which is valued for fisheries, fossil fuel reserves and marine shipping lanes.

 

Over the past decade, China, as keeper of Asia’s strongest military, has alarmed the other claimants by constructing artificial islands for military use and passing its vessels through disputed tracts of water. The Philippines won a world court arbitration case against China in 2016 over the reach of China’s maritime claims, but China rejected the ruling.

 

Duterte sought a first-ever Sino-Philippine friendship that same year, as China pledged $24 billion in aid and investment for the impoverished Southeast Asian country. Over the past four years, however, China has allowed its boats to venture near disputed maritime features, and a Chinese vessel sank a Filipino boat in 2019.

 

Many Filipinos believe the post-2016 uptick in Sino-Philippine relations has not delivered enough aid or investment. The U.S. government represents a more stable ally, some analysts say.

 

“I do think (Duterte) still recognizes that, practically speaking, the Philippines can’t do it alone,” said Derek Grossman, senior defense analyst with the U.S.-based Rand Corporation research organization.

 

Washington still “stands by its ally the Philippines,” the U.S. Department of State said in a November statement on Chinese coast guard vessels that used water cannons against Filipino resupply ships in the South China Sea.

 

Election uncertainty

 

Duterte must step down from office in June because of term limits. Presidential election front-runner Ferdinand “Bongbong” Marcos Jr., son of the late dictator Ferdinand Marcos, has said he would not seek U.S. help in settling the maritime dispute with China. But most Filipinos still prefer stronger U.S. ties, analysts say, so Marcos might take a tougher line against Beijing, or a stronger stance in favor of Washington, if elected in May.

 

“If things are stable in the South China Sea, then China won’t be much of an election issue, but, for example, (if) another incident takes place, this will prop up nationalist sentiment here in the Philippines,” said Aaron Rabena, a research fellow at the Asia-Pacific Pathways to Progress Foundation in Metro Manila.

 

China has not formally protested the BrahMos missile deals. Its forces could ultimately “overwhelm” the missiles, Batongbacal said.

 

At a media Christmas party in December, the Chinese ambassador to Manila, Huang Xilian, sounded an optimistic note regarding overall relations. “As the relationship between China and the Philippines become increasingly closer, some differences have inevitably appeared, but this does not affect our overall relationship,” Huang said.

 

Source: Voice of America

At Beijing Olympics, Xi and Putin Strive for Unity Against US

Chinese leader Xi Jinping and Russian President Vladimir Putin meet Friday ahead of the opening ceremony for the 2022 Beijing Olympics, in what is expected to be a show of unity amid each country’s increasingly fraught relationship with the United States.

Though Russia and China do not share a formal alliance, both countries have drawn closer in recent years as they work to counter U.S. influence.

China has been more vocal in supporting Russia, even as Moscow masses more than 100,000 troops along the border with Ukraine, raising fears of a conflict. Russia has demanded Ukraine not join NATO and wants the military alliance to pull back troops from Eastern Europe.

Analysts say Russia-China cooperation could make it harder for the United States to punish Moscow in the event of a Russian invasion of Ukraine.

An increase in U.S.-Russia hostilities could also divert the attention of U.S. President Joe Biden, who has identified China as his biggest foreign policy priority.

However, China may not welcome any major foreign policy distractions, either.

Beijing on Friday will host the opening ceremony for what will be more than two weeks of Olympic events. Perhaps even more importantly, Xi is in the midst of a crucially important season of domestic political maneuvering meant to shape what is expected to be his indefinite rule over China.

“Beijing wants stability and predictability. They will not welcome foreign turbulence,” said Ryan Hass, a China scholar at the U.S.-based Brookings Institution, in a thread on Twitter.

Xi and Putin, two strongman leaders who preside over authoritarian governments, have a long history. This will be the 38th meeting between the two men, according to Beijing.

In December, Xi said he welcomed the visit by Putin, whom he called his “old friend.” Putin was the first international leader to RSVP for the Beijing Olympics, after the United States announced a diplomatic boycott of the Games over China’s abuses against Uyghur Muslims.

In a letter published earlier this week in China’s official Xinhua news agency, Putin slammed the U.S.-led boycott, lamenting “attempts by a number of countries to politicize sports for their selfish interests.” Putin’s letter also declared that the Russia-China partnership had entered a “new era.”

Russia and China have a long history of working together to block U.S. positions at the United Nations Security Council, where all three are veto-wielding permanent members.

Most recently, China and Russia have found common ground over Ukraine. A recent statement by China’s Ministry of Foreign Affairs referred to Russia’s “legitimate security concerns” and called for an end to “Cold War mentality,” a clear reference to what it sees as U.S. foreign policy.

“The Chinese have moved progressively closer to Russian positions,” said Evan Feigenbaum, vice president for studies at the Washington-based Carnegie Endowment for International Peace.

This is a major shift from China. During Russia’s invasion of Georgia in 2008 and its invasion of Crimea in 2014, China was “not leaning so far in toward their partnership with Russia,” Feigenbaum said, speaking at an online forum.

“The China-Russia partnership looks a lot different to an American not just defense planner but strategic thinker than it would have just six or seven years ago,” he said.

However, China has also called for a lowering of tensions over Ukraine and proposed the implementation of the Minsk agreement, a 2014-15 deal to restore peace following a flare-up of violence along the Russia-Ukraine border.

“China is in a diplomatic logjam,” Hass said. “It would face difficulties and unwelcome turbulence from a conflict in Ukraine, but at the same time it wants to preserve strong relations with Russia and it does not want to do the U.S. any favors.”

 

 

Source: Voice of America