Bunge profit falls 62% in first quarter

by Eric Schroeder
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WHITE PLAINS, N.Y. — Net income at Bunge Ltd. in the first quarter ended March 31 totaled $84 million, equal to 57c per share on the common stock, down 62% from $224 million, or $1.49 per share, in the same period a year ago.

Net sales during the first quarter of fiscal 2012 were $13,446 million, up 10% from $12,194 million in the first quarter of fiscal 2011.

“We faced headwinds in the first quarter, as expected, but are confident that we will deliver strong results in 2012,” said Alberto Weisser, chairman and chief executive officer. “Agribusiness and food and ingredients produced good results in the quarter. Lower margins for ethanol depressed results in sugar and bioenergy. Fertilizer margins were pressured by an environment of falling international prices, an inherent risk in this business.

“Looking ahead, margins should improve significantly in sugar and bioenergy with the new harvest and in fertilizer with the start of the traditional sales season later this year. Market conditions in agribusiness indicate cause for optimism. Supply and demand in oilseeds and grains is more balanced, which should support crush margins globally. Export shipments in key crops are up compared to last year and the second half of the year promises to be active in the Northern Hemisphere.”

For Agribusiness, first quarter EBIT fell to $197 million from $249 million, while sales rose 15% to $9,317 million from $8,102 million.

“Grain merchandising benefited from a strong performance in South America due to the smaller U.S. grain harvest last fall, but results were lower when compared to an especially strong prior-year period,” Bunge said of first-quarter results in the Agribusiness segment. “Higher oilseed processing results in Brazil and Canada were more than offset by lower results in the U.S. and Europe. Increased volume in the quarter was primarily driven by higher grain merchandising and oilseed processing in Europe, the addition of new grain facilities in the U.S., and our two new oilseed processing facilities in Asia that commenced operations after the first quarter of last year.”

The Edible Oil Products segment had first-quarter EBIT of $21 million, down 38% from $34 million, and sales of $2,221 million, up 10% from $2,016 million. Bunge said the sluggish results reflected lower performance in the United States and Brazil, higher advertising expenses and challenges related to the implementation of a new SAP system that resulted in lost sales opportunities.

For Milling Products, first-quarter EBIT was $27 million, down 18% from $33 million in the same period a year ago. Net sales for the quarter also were lower, easing 15% to $427 million from $500 million. Bunge said improved results in corn milling were more than offset by lower results in wheat milling.

Bunge sustained a loss of $33 million in its Sugar & Bioenergy segment during the first quarter of fiscal 2012, which compared with EBIT of $2 million a year ago. Net sales fell 17% to $881 million from $1,061 million.

In the Fertilizer segment, Bunge sustained a loss of $74 million, which compared with a loss of $1 million in the same period a year ago. Sales rose 17% to $600 million from $515 million.

Looking ahead, Drew Burke, chief financial officer, said Bunge expects a strong 2012 in agribusiness.
“It is currently the high season for oilseed processing in South America, and good global demand for protein meal and vegetable oil, as well as a pick-up in farmer selling following the recent increases in prices, should benefit oilseed processing margins in the region,” he said.

Mr. Burke also said the company expects a solid performance in food and ingredients, and overall full-year results should exceed last year.

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