James P. Zallie: Yes, I mean, we will always disciplined, of course, and look at every deal prospect critically for the synergies. But now, what has happened this past year is we went through a full year lengthy strategy refresh using, some of you may know the play-to-win framework, and so we’re very clear about our winning aspiration. We’re very clear about where to play and how to win. And we will be supporting the strategy with M&A and organic investments as well. And we do have, I will say, we do have some pretty big organic investments that we’re excited about that we want to pursue as well.
Andrew Strelzik: Okay. That makes perfect sense. Thank you very much.
Operator: Thank you. Our next question will come from the line of Ben Theurer with Barclays.
Ben Theurer: Hi, yes. Good morning, Jim and Jim. Thank you very much for taking my question. I wanted to ask about the new operating structure and the reorganization of it and the benefits as you play this out. Can you share maybe a few examples of how this is going to help you with your customers globally, particularly in the Texture and Healthful Solutions segment that you pointed out is going to be managed on a global way, in order to potentially drive volume or profitability, what is it would you hope from the new operational structure, that would be my first question?
James P. Zallie: Yes. I think, Ben, that the pivot towards a more global focus on Texture and Helpful Solutions, first of all, we believe that there is an exciting opportunity ahead for Ingredion to work with customers, to influence their understanding and our collective understanding of how Texture impacts overall liking and consumer preference analogous to flavors. And we’ve been saying for a while, but we really believe that. So, we’ve invested in consumer insights and sensory capabilities, and also now Texture measurement science capabilities, so that we can correlate that. On the Healthful Solutions side, our focus is very clear. It is on sugar reduction, which has a large total addressable market protein and fiber fortification.
Those are our platforms for Healthful Solutions. And it is with that focus, which are driven by global trends and have universal value propositions for all customers globally, we think that just lends itself to a global approach. Ingredion, for the longest time, has been very regionally organized, and that has served us very well from a standpoint of regional accountability for P&Ls and delivering results. We believe that what we have done in the last, say, five years, where we have, for efficiency purposes, for effectiveness purposes, stood up a global business services organization, for example, shared services with finance, are some of our marketing functions and HR functions are now globalized in support of more of a global business model.
We couldn’t have done what we’re about to embark on five years ago, because we had to build the capabilities, but we’ve built those muscles from a standpoint of back office, shared service, global business operations, and by the way, the most important move that we made was globalizing operations. And I can tell you, and what you’re seeing in our results are the benefits of moving to that global operations model. Some of the things we talked about in relationship to our net promoter scores, the service enhancements, the benefits in procurement that we’re getting, the safety results, that operational excellence focus on a global basis with benchmarking best practice is serving us very well. So, it allows for the commercial organization in Texture and Healthful Solutions to focus much more time and be much more intimate with customers to really understand their brands and what they need from us as a co-creation partner.
So, we are looking at adjusting KPIs and incentive schemes to drive the kind of global behavior to align with global key customers, but also share very actively where consumer buying behavior is going to change. There’s a lot of questions about how consumer buying behavior is likely to change with a lot of things that are going on in the food industry right now, and we think being organized the way we are moving will serve us very well to be much more intimate with customers.
Ben Theurer: Very clear. Thank you very much, Jim. And then just one question related to the guidance, if you could maybe help us understand and frame a little bit the impact of the Korea divestiture kind of from top to bottom. We got obviously the impact on the operating income side and on EPS, but could you potentially quantify what the impact is more or less on topline as well just that we can frame that better in our modeling exercises? Thank you.
James D. Gray: Yes, sure. Say, for the full year 2023, South Korea delivered about $325 million of net sales, so unaudited, but it’s about the range. And then if you’re looking at kind of an approximation for the adjusted Op income, the effective the net of the effective tax rate, it was probably more in the teens. So, if you take EPS times our shares outstanding and you’re trying to get to an adjusted Op income, I’d say that adjusted Op income range was in the kind of the low 30s, in terms of what to look at in terms of 2023 contributions.
Ben Theurer: Okay, perfect. Thank you very much, Jim.
James D. Gray: You got it.
Operator: Our next question comes from the line of Kristen Owen with Oppenheimer. Kristen, your line is now open.
James D. Gray: Hi, there, good morning.
Kristen Owen: Sorry about that guys. Wanted to follow-up also with a modeling question to start. First, just on the revaluation of the peso, the hyperinflation adjustment. Can you just help us understand the mechanics there? Is this sort of a one-time true up for all of 2023, just starting there with what the assumption is for 2024, and how the mechanics of that adjustment work?
James D. Gray: Yes. So just when we look at whatever the balance sheet items are on our core JV and you translate that into dollars. Whenever you have an official change in the exchange rate, we have to take a one-time, hit to those values. And so, then that $15 million, is that just the balance sheet impact due to the kind of the hyperinflation treatment under GAAP that we’ll be recognizing in the first quarter. So that said, so then now you look forward to 2024, still great fundamentals in the Argentina market. Sugar prices are high. Corn is relatively cheap. The attractiveness of high fructose syrup to beverage makers is very, very good. So, the Argentinean JV should probably continue to perform well in 2024. So, we’ll have good underlying OI.
What we just need to watch is, is with the new government, how do they look at the official rate of the peso. But you probably won’t see something like what we witnessed in December, where you had a peso, official peso rate that was in the 300s it’s going to 800. So, it’ll be unlikely that you’ll have an additional one-time hyperinflation impact further into 2024. There may be some, but it’s unlikely the degree of magnitude that we’re witnessing here that we have to take in January.
Kristen Owen: Okay. That’s super helpful, Jim. So, taking that into account and just thinking through all the moving pieces ‘23 to ‘24, then ‘24 to ‘25, when we look at the guide in 2024, the outlook for mid-single-digit growth in operating income coming off a very strong 2023 results. I’m just wondering how we should think about the guide in the context of your 5% to 7% operating income CAGR, that growth framework that you outlined for 2025?
James D. Gray: Yes, sure. If I could take a crack at that, obviously, we’re not kind of necessarily out here kind of reissuing kind of a four year outlook. We’re still working within our four year outlook. But within 2024, look, there are some risks to the year. Obviously, there’s, it’s election year, we may see changes to the impact on taxes. I think we’re a little bit concerned maybe on risks around stubborn food inflation, and what’s the impact on consumer demand, the shape of the grocery store basket, but on the other hand, some of your peers are talking about, well, will brand companies have to use promotions or be enticed by grocers or other retailers to bring some promotions in to excite the consumer, to fill those grocery baskets back up or to maintain branded market share on shelf.
