Bunge 2013 income boosted by strong fourth quarter

by Josh Sosland
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WHITE PLAINS, N.Y. — Net income at Bunge Ltd. in the year ended Dec. 31, 2013, totaled $306 million, equal to $1.55c per share on the common stock, up sharply from $64 million, or 19c per share, in 2012. Net sales were $61,347,000, up 0.5% from $60,991,000 the year before.

In the fourth quarter of 2013, Bunge net income was $115 million, or 75c per share, versus a loss of $599 million in the fourth quarter of 2012. The loss during the earlier year included a $514 million goodwill impairment charge in connection with the Bunge Sugar and Bioenergy business. Fourth-quarter sales were $16,375 million, down 3.9% from $17,040,000.

Segment EBIT in 2013 was $1,329 million, up 116% from $628 million. Adjusted for special items, segment EBIT was $1,291 million in 2013, up 16% from the year before. By segment, year-to-year changes were variable with Agribusiness EBIT of $1,008 million in 2013, down 3% from 2012; Sugar and Bioenergy, which sustained losses of $34 million in 2013 and $118 million in 2012; Food and Ingredients, which posted EBIT of $280 million, up 69% from 2012; and Fertilizer, $37 million, up 61%.

“Agribusiness and Food and Ingredients finished the year on a strong note,” said Soren Schroder, chief executive officer. “On a combined, full-year basis, Agribusiness, Edible Oils and Milling segments generated record results of approximately $1.3 billion in EBIT and returns above cost of capital.

“Our Agribusiness team effectively managed risks as markets transitioned from extreme tightness to emerging surpluses, while capitalizing on strong oilseed processing margins in the Northern Hemisphere and navigating unpredictable farmer selling patterns. Food and Ingredients achieved record quarter and full-year results with all regions reporting higher year-over-year annual earnings. Our food team has made big strides in its effort to engage with customers and extract more value from operations and category management, which are all part of a larger performance management program we are rolling out across our business.”

The Bunge Sugar and Bioenergy business “performed well,” in part due to efforts to enhance the cost structure of the segment, Mr. Schroder said. Still, depressed global sugar prices contributed to difficulties in the business.

Mr. Schroder was optimistic about Bunge’s outlook for 2014. The hopeful view was prompted in part by a number of tailwinds he said should be positive for world trade.

“We enter 2014 with good momentum,” he said. “Lower commodity prices are spurring growth in demand and trade. Soybean crops in South America are on track to set another record level of production. Similar to last year, this will put a premium on logistics expertise and assets, which fits our capabilities well. We expect our Food and Ingredients segment to extract even greater value from the downstream chains, and we will have incremental contribution from our acquisition of Grupo Altex’s wheat mills in Mexico, which we completed at the end of 2013.”

Offering an upbeat outlook for the company’s Agribusiness segment and Food and Ingredients segment was Drew Burke, chief financial officer. He was considerably more guarded in comments about the Sugar and Bioenergy segment.

“In Agribusiness, global demand is strong,” he said. “With the reduction in crop prices, livestock production economics are generally good around the world, which is positive for oilseed processing margins and trade. South American crops are progressing well, and soon soy export demand will be shifting from the U.S. to this region. Handling and transporting this record crop will pose significant logistical challenges, particularly in Brazil, which should provide us with attractive market opportunities considering our network of assets and experience in the region.

“In Food and Ingredients, we expect continued strong performance, as we continue to strengthen our operations, invest in innovation and leverage our customer relationships across regions and businesses. Demand in our core categories is strong and our businesses are well placed to take full advantage of that dynamic. Similar to past years, we expect results to be seasonally weaker in the first quarter and progressively improve throughout the year.

“Considering global sugar prices and the uncertainty surrounding further gasoline price increases in Brazil, we are forecasting results in Sugar and Bioenergy to be about breakeven. We will manage this business to be cash flow positive, limiting capital investment to agricultural and industrial maintenance and efficiency projects only.”
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