ST. LOUIS — Building on its increased mid-cycle earnings baseline of $8.50 per share, approximately $3.3 billion of projected future investments in growth capital expenditures and M&A, and an allocation of approximately $1.25 billion for share repurchases, Bunge introduced an earnings framework of approximately $11 per share by the end of 2026 in its discussion of second-quarter results on July 27.
“The incremental earnings from capital that we’re deploying should enable us to perform at a higher level in a mid-cycle environment,” Gregory A. Heckman, chief executive officer, said during a July 27 conference call with analysts. “As a result, we’re providing a four-year earnings growth framework of approximately $11 per share by the end of 2026. This growth framework includes the increased earnings baseline of $8.50, plus the future benefits of investments in the business and share repurchases.”
Based on the strength of second-quarter results and the current market environment, Bunge increased its full-year 2022 earnings per share outlook to at least $12 per share.
“Taking into account our second-quarter results, the current market environment and forward curves, we’re increased our full-year adjusted EPS outlook to at least $12 per share, a 50¢ per share increase over our previous outlook, with potential upside depending on market environment and supply and demand balance,” said John W. Neppl, executive vice president and chief financial officer.
In the second quarter ended June 30, Bunge posted net income of $206 million, equal to $1.34 per share on the common stock, which was down 43% from $362 million, or $2.37 per share, in the previous year’s second quarter. The most recent quarterly results included charges of $233 million related to a mark-to-market timing difference and $68 million in other charges. Adjusted earnings were $2.97 per share, up 14% from $2.61 in the previous year’s second quarter. Net sales in the second quarter were $17.93 billion, up 17% from $15.39 billion in the second quarter of the previous year.
Bunge’s stock price on the New York Stock Exchange closed at $91.52 per share on July 27, down 4% from a close of $95.33 on July 26.
In Bunge’s Agribusiness, EBIT of $93 million was down from $364 million in the second quarter of 2021. When adjusting for a mark-to-market timing difference and certain charges, EBIT was $386 million, down 4% from $403 million in the previous year’s second quarter. Volume decreased 10% to 19.49 million tonnes from 21.65 million tonnes.
Merchandising results were down compared to a particularly strong prior year as a higher contribution from global grains was more than offset by lower results in ocean freight. Processing results were primarily driven by US and Brazil soy crush due to strong mill and oil demand. Results in softseed crush were also higher than last year primarily driven by North America.
In the Refined and Specialty Oils segment, second-quarter EBIT of $218 million was double the $102 million reported in the second quarter of the previous year. Net sales rose 39% to $4.4 billion from $3.2 billion. Volumes were 2.32 million tonnes, up from 2.24 million tonnes. The segment’s performance improved in all regions with particular strength in North America and Europe both benefiting from strong food demand, as well as strong fuel demand in the United States.
The Milling segment posted EBIT of $109 million, tripling the previous year’s EBIT of $34 million. Net sales rose 44% to $677 million from $471 million. Volume was 1.14 million tonnes, up 2% from 1.12 million tonnes in the previous year’s second quarter. Improved margins in North and South America wheat milling and effective risk management of supply chains drove the improved performance, Bunge said.
“Milling results were up, delivering a record quarter, as our teams effectively managed our supply chains in a dynamic environment,” Mr. Heckman said.
Over the first six months of the fiscal year Bunge companywide posted net income of $894 million, or $5.81 per share on the common stock, down from $1.19 billion, or $7.85 per share, in the same time of the previous year. Six-month net sales of $33.8 billion were up 20% from $28.35 billion in the same period of the previous year.
“When we first announced our mid-cycle baseline in June of 2020, we were early in our work to transform our operating model and optimize our portfolio,” Mr. Heckman said. “We provided that earnings framework to help you think about how we intended to operate the business with the changes we were making.“With the initial portfolio and organizational work now behind us, we’re updating our baseline in the earnings framework from $7 to $8.50, and that reflects our global platform as it stands today. This includes the structural improvements in the oilseed market environment and greater benefits from our operating model.”