WHITE PLAINS, N.Y. — A sharp increase in earnings coupled with a steep decrease in sales led to mixed results at Bunge Ltd. in fiscal 2015. The company’s top executive also indicated that while there are “positive signs” ahead, fiscal 2016 appears to be filled with challenges. The news sent the company’s share price down more than 16% in early trading on the New York Stock Exchange on Feb. 11, to its lowest level since July 30, 2010.
Net income at Bunge Ltd. in the year ended Dec. 31, 2015, totaled $738 million, equal to $4.84 per share on the common stock, up 58% from $467 million, or $2.96 per share, in fiscal 2014.
Net sales during fiscal 2015 were $43,483 million, down 24% from $57,161 million in fiscal 2014.
“In 2015, the Bunge team achieved numerous milestones: record Agribusiness EBIT, four quarter trailing R.O.I.C. in our core Agribusiness and Food operations of 10% and approximately $100 million of savings from performance improvement initiatives,” said Soren Schroder, chief executive officer. “We also executed on our balanced approach to capital allocation, buying back $300 million of common shares, which has continued into 2016 with an additional $100 million of buybacks.”
Mr. Schroder said Bunge managed the challenging market conditions during the fourth quarter of fiscal 2015 by leveraging its balanced global footprint to capitalize on good soy processing margins and increased South American grain exports.
Net income at Bunge in the fourth quarter ended Dec. 31 totaled $203 million, or $1.30 per share, which compared with a loss of $54 million in the same period a year ago. Net sales were $11,133 million, down 16% from $13,231 million a year ago.
For Agribusiness, full-year EBIT increased 24% to $1,108 million from $890 million, while sales decreased 26% to $31,280 million from $42,109 million.
Bunge said lower results in grains during the fourth quarter primarily reflected reduced volumes and margins in the company’s U.S. operation, which was affected by slow farmer selling and increased global export competition.
The Edible Oil Products segment posted EBIT of $59 million, up from $58 million a year ago. Sales fell 16% to $6,698 million from $7,972 million. Bunge said its North American business performed well during the fourth quarter, benefitting from a combination of a more competitive and higher value product mix and increased demand from the food service channel. Bunge also said it benefitted from increased packaging volumes in Canada and lower industrial costs from its performance improvement program.
For Milling Products, fiscal 2015 EBIT was $103 million, down 21% from $131 million in fiscal 2014. Net sales for the year also were lower, decreasing 22% to $1,609 million from $2,064 million. Despite the lower earnings and sales, Bunge said it made “significant progress” integrating its acquisitions in Mexico, the United States and Brazil, as well as in rebuilding its mill in Rio de Janeiro, Brazil. The company also said corn milling results in North America improved during the fourth quarter, reflecting lower costs, more optimized product mix and the contribution from the company’s extruded product and masa acquisitions.
Bunge sustained a loss of $27 million in its Sugar & Bioenergy segment during fiscal 2015, which compared with a loss of $168 million a year ago. Net sales decreased 23% to $3,510 million from $4,542 million.
Looking ahead to 2016, Mr. Schroder said he sees “positive signs” for the business.
“Global demand for our core Agribusiness products continues to grow with an increasing percentage of this growth being supplied by South America, which plays into the strength of our footprint,” he said. “Brazil is expected to grow large soy and corn crops supporting good crush and export margins, and improved farmer selling in Argentina will allow us to operate our crushing and port assets at higher utilizations. Our food business will continue to grow, benefitting from leaner operations, more focused, consumer-driven innovation and tighter working relationships with key customers. Brazilian ethanol and global sugar prices have both improved. These improvements, coupled with stronger agricultural efficiency and lower costs, give us confidence we will experience a solid year in sugarcane milling.”
Despite the optimism, Mr. Schroder also cautioned that challenges remain.“Conditions will remain difficult for our Brazilian Food and Ingredients businesses,” he said. “Northern Hemisphere oilseed processing margins and grain exports will be pressured until markets adjust to the increased level of global supplies.”