Bunge reports net loss of US$92m in Q3

USA – Leading grains and agribusiness company Bunge has reported its Q3 results ended September 30, reporting a net loss of US$92 million in 2017 from US$118 million reported in 2016.

The four-year slump in grain prices, prompted by oversupply because of bumper harvests, is putting pressure on Bunge.

The grain giant now expects EBIT of US$425 million to US$500 million in its agricultural business. Previously, it had forecast EBIT to be US$550 million – US$650 million.

Net sales were also flat at US$11.42 billion and Bunge posted a profit of 75 cents per share.

“Our earnings improved sequentially and year-over-year; although they continued to be impacted by market and industry headwinds.

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As a result, we are reducing our earnings guidance for the year in Agribusiness and Sugar & Bioenergy,” said Soren Schroder, Bunge’s CEO.

“At the same time, we are making good progress towards our strategic objectives of creating a more balanced business, managing those aspects of our operations that we can control and taking proactive steps to ensure we remain agile in responding to changing market conditions.”

According to Bunge, the recent acquisition of a majority stake in IOI Loders Croklaan has significantly accelerated the growth of its value-added oils business.

“Consistent with our strategy, in September we announced the acquisition of Loders Croklaan, which is expected to close in the first half of next year.

This transaction will accelerate our growth in higher margin value-added products and it gives us an unmatched global footprint with best-in-class innovation capabilities.”

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“In addition, I am pleased with our progress to date in reducing costs and increasing efficiencies.

In the quarter we achieved US$30 million of industrial cost savings bringing our year-to-date savings to US$73 million against our full year target of US$100 million.

We also expect to meet or exceed the US$15 million 2017 target set out in our Competitiveness Program, which is expected to reduce overhead costs by US$250 million by the end of 2019,” said Soren.

Grains and oilseeds results, although higher than last year, had weak overall margins, reflecting excess global supplies, spot global customers and pressure on farmer margins.

The company reported that in the grains business, higher origination results were driven by improvements in Brazil and Argentina, which benefited from a spike in farmer selling in July as local prices increased on weather concerns in the US and the devaluation of the Real and Peso.

Compared to last year, soy processing results improved, driven by higher results in the US, Brazil and China, all of which benefited from higher volumes and effective risk management.

Results also improved in most regions, driven by higher margins and lower costs.

In North America, lower costs and higher margins in Canada more than offset softer US refining margins.

Better results in Asia were driven by improved performance in both China and India with increased sales of higher value products.

“In Food & Ingredients, we continue to grow value-added sales and are very encouraged by the traction we have made with key accounts, particularly in Edible Oils.

In Milling, our volumes in Mexico are improving and the smaller wheat crops in Brazil and Argentina should give us an advantage with our integrated footprint.”

These recent developments and our disciplined focus on managing our business are expected to lead to improved results in the fourth quarter and will provide good momentum as we enter 2018.”

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