ST. LOUIS — Expressing confidence in the continuation of global demand for renewable fuels, executives of Bunge Ltd. raised the company’s earnings outlook for fiscal 2022 during an Oct. 26 conference call to discuss third-quarter results. Gregory A. Heckman, chief executive officer, said Refined and Specialty Oils has proven to be the most stable part of the company’s P&L.
“Renewable diesel, that is definitely a tailwind in biofuels in general globally,” Mr. Heckman said. “I think the energy prices and the volatility we expect going forward, that doesn't look like that’s going to change.
“Adjusted core segment EBIT was above last year’s results and ahead of our expectations driven by strong performances in Agribusiness and Refined and Specialty Oils. Like all businesses, we are impacted by inflation or recession but not in the same manner or magnitude as purely industrial companies due to our place in the center of the supply chain.
“Looking ahead, we expect the market to remain dynamic and are moving forward with our usual discipline. Based upon our execution so far and the current environment, we now expect to deliver adjusted EPS of at least $13.50 for the full year 2022, which would be our third record year in a row.”
In the third quarter ended Sept. 30, net income attributable to Bunge eased to $380 million, equal to $2.49 per share on the common stock, down sharply from $653 million, or $4.28 per share, in the year-ago quarter. Adjusted EPS for the quarter was $3.45, down 7% from $3.72 a year ago.
“Our reported results include a negative mark-to-market timing difference of 19¢ per share and a net negative impact of 70¢ per share related to one-time items,” said John W. Neppl, executive vice president and chief financial officer. “EBIT was $740 million in the quarter versus $698 million last year.
“The higher results were driven by our Refined and Specialty Oils segment. In total, Agribusiness results of $528 million compared to $533 million last year. In Processing, results were essentially flat with the last year as increases in North and South America were offset by lower results in Europe where a combination of a sharp rise in energy costs and increased mil imports pressured margins.”
On Oct. 26, Bunge’s share price on the New York Stock Exchange advanced 8% in mid-day trading to $99.65 compared with the previous day’s close of $91.97.
“I think when you look at just the front-end demand that we have for soybean oil, refined oil, today in a market where perhaps even R&D isn’t ramping up as quickly as some people would have expected, we’re still very tight and forward demand for soybean oil is very strong,” Mr. Neppl said.
“And on top of that, there’s always the looming recession discussion. But for us, I think if you go back and look over time, our company has performed extremely well historically and generate a lot of cash even in tough environments. So, we feel very good about the next couple of years.”
In Bunge’s largest division, Agribusiness, adjusted segment EBIT for the quarter was $528 million, compared with $533 million in the year-ago quarter. Agribusiness volumes were 19.62 million tonnes compared with 19.53 million tonnes in the third quarter of 2021. Sales were $11.74 billion, up 19% from $9.87 billion in the third quarter a year ago.
Adjusted EBIT of the Refined and Specialty Oils division was $195 million, up 37% from $142 million in the third quarter of 2021. Sales in the quarter were $4.3 billion, up 18% from $3.65 billion.
In the Milling division, adjusted EBIT was $17 million, a 26% drop from $23 million in the third quarter of 2021. Net sales increased to $631 million from $530 million. Higher results in North America were more than offset by lower results in South America, Bunge said.
Mr. Heckman indicated Bunge’s ability to adapt in an unstable market has benefited the company.
“And what that means is that when we had a supply problem or a demand surge globally, every origin and every destination was available to solve that problem in the past,” he said. “And that’s no longer true based on what’s happened with the war and with geopolitical tensions.“And our business is really helping our customers at both ends of the supply chain, manage that complexity and helping solve problems. And I think our global footprint and our way of operating it are showing them in a number of different conditions that we can continue to deliver, and we’re really proud of that.”