Bunge earnings fall 1% in third quarter

by Josh Sosland
Share This:

WHITE PLAINS, N.Y. — Net income of Bunge Ltd. in the third quarter ended Sept. 30 fell 1% to $232 million, equal to $1.62 per share on the common stock, down from $234 million, or $1.70 per share, in the same period a year ago. The decline reflected mixed results in the company’s different business units.

Net sales in the third quarter were $11,298 million, down 24% from $14,797 million in the same period a year ago.

"Bunge produced mixed results in the third quarter," said Alberto Weisser, chairman and chief executive officer. "Our agribusiness operations performed well during a volatile period, demonstrating the value of our global franchise and the ability of our team to manage risk effectively. Edible oils also posted a solid quarter. On the other hand, margins in our fertilizer business continued to be pressured by high-cost inventory and a weak pricing environment."

During the quarter, Mr. Weisser said Bunge laid the foundation for its new export grain terminal in the U.S. Pacific Northwest.

"Building our global grain business is one of our core strategies and this terminal is a significant part of that effort," he said. "When completed, it will handle over 8 million tons of grains and oilseeds a year and serve as an important link between our North American grain business and our customers in Asia. We are also expanding in food and ingredients. Earlier this month, we closed on our acquisition of Raisio’s margarine businesses in Europe. The transaction includes two margarine production facilities and a portfolio of consumer margarine brands."

Agribusiness earnings before interest and taxes in the third quarter were $294 million, up 73% from the third quarter last year. Last year’s results included a $60 million credit resulting from a favorable ruling related to certain transactional taxes in Brazil. Sales, meanwhile, fell 20% to $8,133 million from $10,152 million.

"Our U.S. and Brazilian grain origination businesses performed well in the quarter, benefiting from a combination of tight soybean supplies in Argentina due to weather-related issues earlier in the year and strong demand from China," Bunge said. "Higher soybean processing results in the U.S. and South America were partially offset by lower softseed processing results in Europe and Canada."

Agribusiness volumes were 30,493 million tonnes, up 3% from 29,683 million last year.

Edible Oil Products EBIT in the third quarter was $35 million on sales of $1,572 million. This compared with a loss of $29 million last year on sales of $2,232 million.

"Results were higher in most regions of the world with our businesses in Europe and North America showing the strongest improvement," Bunge said.

Edible Oil Products volume was 1,465 million tonnes, up 1% from 1,452 million tonnes last year.

Milling Products EBIT in the third quarter fell to $7 million, down 68% from $22 million in the third quarter last year. Sales in the most recent quarter totaled $403 million, down 22% from $514 million in the third quarter of last year.

Milling Products volume was 1,071 million tonnes, up 7% from 1,004 million in the third quarter of 2008.

"Higher corn milling volume was more than offset by lower margins in wheat milling, which suffered from increased competition," Bunge said.

For the second consecutive quarter, the weakest link at Bunge was the fertilizer segment, with a loss of $127 million, versus an $84 million profit in the third quarter last year. Volume was 3,814 million, up 24%, while sales were $1,190 million, down 37%.

Bunge attributed the loss to the continued mismatch between current market prices and inventory costs, which negatively impacted margins.

In the nine months ended Sept. 30, Bunge net income was $350 million, or $2.48 per share, down 73% from $1,274 million, or $9.26, during the first nine months of fiscal 2008.

Looking ahead to the remainder of the year, Jacqualyn Fouse, chief financial officer, said agribusiness should post a strong finish while food and ingredients should continue to recover. But continued weaker results in the company’s fertilizer business have led the company to cut its 2009 full-year earnings guidance to $3.10 to $3.50 per share from earlier guidance of $4.90 to $5.40 per share, Ms. Fouse said.

Comment on this Article
We welcome your thoughtful comments. Please comply with our Community rules.








The views expressed in the comments section of Baking Business News do not reflect those of Baking Business News or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.