Bunge posts strong earnings in full year results on strong soy crush margins

USA – Agribusiness giant, Bunge has reported better results indicating full year earnings per share of US$1.57 from US$0.89 boosted by strong soy crush margins in the agribusiness division.

Net income in the year ended Dec. 31, 2018, was US$233 million, up 85% from US$126 million in fiscal 2018 while sales were US$45.743 billion, down narrowly from US$45.794 billion.

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In the fourth quarter, the company recorded $0.51 in earnings per share with special charges including US$59 million in interest and income tax charges, US$10 million in impairment charges and other charges.

Compared to 2017 when it posted a loss of US$69 million in the fourth quarter, the company sustained a loss of US$74 million in the fourth quarter.

“While the Strategic Review Committee continues its work, we are refocusing the organization and placing greater emphasis on improved execution.

Our key priorities are to drive operational performance, optimize the portfolio, strengthen our capital allocation framework and sharpen our financial discipline.

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 I am confident that with the actions we are taking, we will be able to better leverage Bunge’s asset base and increase shareholder returns,” said Acting CEO Greg Heckman.

The company’s largest division, Agribusiness was impacted by decline in value of Brazilian soybean ownership.

Factors relating to China trade and demand caused Brazilian soybean prices to converge with U.S. and Brazilian new crop prices.

Grains origination and oilseeds trading, and distribution recorded US$125 million loss as a result of the associated price reductions.

In Oilseeds, structural soy crush margins were higher in the U.S., Europe, Brazil and Asia due to more favourable market conditions but were lower in Argentina due to drought and farmer retention.

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In Grains, Origination results declined due to lower structural margins and volumes, which were impacted by the decrease in soybean demand from China.

Edible Oil Products benefited from higher volumes and lower unit costs in Europe and an increase in volumes and margins in Argentina.

The quarter was boosted by the contribution from Loders Croklaan, after completing the acquisition in March last year.

The company said integration of Loders Croklaan with its existing B2B oils business is progressing as planned.

In Milling Products, higher margins and volumes in Brazil were more than offset by lower margins and volumes in Mexico while in Sugar and Bioenergy, the quarter was impacted by heavy rains as poor crop year came to an end.

The company expects break-even results for the sugar and bioenergy sector, and benefit from increased synergies from the integration of Loders Croklaan into the business.

Bunge expects soy crush margins over the course of the year to improve based on U.S.-China trade discussions, crop sizes and farmer commercialization.

“Although 2018 was a substantially better year than 2017, we are not satisfied with these results, and we know that Bunge has the global assets and people to perform better in the future.

In the past several months, the Company has taken several significant and positive steps to reposition itself for sustainable growth, including announcing a leadership transition and enhancing its leadership team, refreshing our Board and establishing a Strategic Review Committee of the Board,” said Kathleen Hyle, Bunge’s Non-Executive Board Chair.

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