WHITE PLAINS, N.Y. — Bunge Ltd. returned to first-quarter profit boosted by a corporate cost-cutting program. Net income of $45 million, or 26c per share on the common stock, in the quarter ended March 31 compared with a loss of $21 million in the previous year’s first quarter. Sales dropped 7% to $9,938 million from $10,641 million.
The Global Competitiveness Program, introduced in July 2017 to simplify operations and streamline customer service, is on track to deliver a total savings of $250 million a year ahead of schedule, according to Bunge. The company achieved $200 million in cost reductions through 2018 and expects an incremental $50 million in 2019.
“G.C.P. has already gone a long way to reduce costs, simplify how we work and help us think differently,” said Gregory A. Heckman, chief executive officer, in a May 8 earnings call. “We will use this momentum, along with the changes to our operating model, to develop a cost structure for the cyclical nature of our industry.”
Continued standardization of processes and a move to shared services, I.T. rationalization, and reductions in indirect spending primarily will drive the incremental savings this year, said Thomas M. Boehlert, executive vice-president and chief financial officer.
Bunge’s stock on the New York Stock Exchange closed at $53.44 per share on May 8, which was up 7% from the May 7 close of $49.98 per share.
Within the company’s Edible Oil Products segment, a full quarter of Loders Croklaan ownership and higher margins in Brazil operations drove improved results. Bunge on March 1, 2018, completed its acquisition of a 70% ownership interest in IOI Loders Croklaan for about $946 million from IOI Corporation Berhad. First-quarter EBIT was $48 million for Edible Oil Products, up from $28 million. Net sales of $2,239 million were up 4.2% from $2,149 million.
Agribusiness EBIT was $109 million, up from $42 million in the previous year’s first quarter, Net sales of $6,919 million were down 7% from $7,462 million. Within Agribusiness, soy crush margins in oilseeds were higher in the United States, Brazil and Europe due to Bunge’s decision in 2018 to hedge a portion of its first-half 2019 crush capacity. Also within Agribusiness, lower margins and volumes in grains were due to the combination of farmer retention of soybeans and reduced export demand from China.
Milling Products EBIT of $17 million matched results from the previous year’s first quarter. Net sales of $426 million were up 4.2% from $409 million. Lower margins and volumes in Mexico more than offset improved results in Brazil. Results in the United States were similar to the results in the previous year’s first quarter.
Losses before interest and taxes were $24 million for Sugar & Bioenergy, which was the same figure as seen in the previous year’s first quarter. Net sales plunged 49% to $285 million from $563 million. The first quarter was the intercrop period as production for the season began toward the end of March. Sugar and ethanol sold during the first quarter was inventory from the previous harvest. Sugar cane milling results were slightly below last year primarily because of lower sugar and ethanol prices.
EBIT of $1 million for Fertilizer compared to a loss of $2 million before interest and taxes in the previous year’s first quarter. Net sales of $69 million were up 19% from $58 million.