ST. LOUIS – Bunge Ltd. raised its fiscal-year outlook for a second time this year when reporting second-quarter financial results, which included a strong performance in Refined and Specialty Oils.
The St. Louis-based company now expects earnings per share of $8.50 for the fiscal year. Originally the company expected EPS of $6 for the year but increased it to $7.50 when reporting first-quarter results.
“Despite the global volatility, we have confidence in our ability to deliver in the back half of the year, based on the business already committed, the crush outlook and the demand for Refined and Specialty Oils,” said Gregory A. Heckman, chief executive officer, in a July 28 earnings call.
Bunge also lifted its earnings baseline of $5 per share set in June 2020.
“With the changes we've made in our business as well as the fundamental shifts in the marketplace, we're taking that baseline EPS up to $7, and that's a $2 increase, and consistent with last time, this reflects our existing portfolio only and does not include any future growth investments,” Mr. Heckman said.
Bunge reported net income of $362 million, or $2.37 per share on the common stock, in the quarter ended June 30, which was down 30% from $516 million, or $3.47 per share, in the previous year’s second quarter. The results included a negative mark-to-market timing difference of 24¢ per share, said John W. Neppl, executive vice president and chief financial officer. Adjusted earnings were $2.61 per share, which compared to $1.88 per share in the previous year’s second quarter. Second-quarter net sales increased 63% to $15.39 billion from $9.46 billion.
Bunge’s stock price on the New York Stock Exchange closed at $78.51 per share on July 28, which was up 4.4% from a close of $75.20 on July 27.
In Bunge’s Agribusiness, EBIT of $364 million was down 58% from $873 million in the previous year’s second quarter. When adjusting for a mark-to-market timing difference, EBIT was $403 million, down 19% from $495 million in the previous year’s second quarter. Volume increased 3.3% to 39.53 million tonnes from 38.27 million tonnes.
“Results in Agribusiness were down versus a very strong quarter last year but exceeded our expectations as the team effectively managed trade flows and capacity utilization,” Mr. Heckman said. “We set quarterly and year-to-date records in soy crush volume, capacity utilization and lower unplanned downtime.”
In processing, higher results in North America and Argentina were more than offset by lower results in Europe and to a greater extent in Brazil, Mr. Neppl said. He added improved performance in merchandising primarily was driven by higher results in ocean freight. Global corn and wheat value chains benefitted from increased volumes and margins.
In the Refined and Specialty Oils segment, EBIT of $102 million was double the $51 million of EBIT in the previous year’s second quarter. Net sales rose 50% to $3.20 billion from $2.13 billion. Volume slipped 1.8% to 2.25 million tonnes from $2.29 million tonnes. Higher margins and record capacity utilization in North America refining drove the segment’s performance.
“Results in Refined and Specialty Oils improved in most regions, with particular strength in North America,” Mr. Heckman said. “In the US, we saw foodservice demand come back stronger and faster than anticipated, and we're experiencing a greater impact from renewable diesel demand than we expected.”
He added, “Our specialty oils business, you saw a better performance there across that business and really gaining momentum. So we'll continue to look at not only the organic growth, but where we have bolt-on acquisitions or tuck-in acquisitions in that business.”
The Milling segment reported EBIT of $34 million, up 36% from $25 million in the previous year’s second quarter. Net sales rose 23% to $471 million from $382 million. Volume was 1.51 million tonnes, up 20% from 1.26 million tonnes in the previous year’s second quarter. Higher volumes, lower costs and supply chain execution in South America drove the improved performance.
Over the first six months of the fiscal year Bunge companywide reported net income of $1.19 billion, or $7.85 per share on the common stock, which more than tripled net income of $332 million, or $2.14 per share, in the same time of the previous year. Six-month net sales of $28.35 billion were up 52% from $18.64 billion in the same time of the previous year.