Bunge's third-quarter profit falls 32%

by World Grain Staff
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WHITE PLAINS, NEW YORK, U.S. โ€” Bunge Ltd. said on Oct. 27 that its third-quarter net income decreased 32% with its agribusiness, sugar and bioenergy and milling product segments having lower than expected results.

Bunge reported earnings of $132 million or 89ยข per share for the third quarter ended Sept. 30. That compares to earnings of $193 million or $1.36 per share for the same period last year. Revenue increased 34% to $15.62 billion.

Alberto Weisser, Bunge's chairman and chief executive officer said, "The third quarter was a particularly volatile period where managing risk in our agribusiness and sugar & bioenergy segments proved to be challenging. Lower than planned sugarcane milling volume due to the continued impact of the drought on our sugarcane yields also weighed on results in the quarter. However, we expect a stronger fourth quarter and see optimistic signs for Bunge in 2012.โ€

Pretax earnings in agribusiness were $159 million compared to $313 million last year. Sugar and bioenergy reported a pretax loss of $43 million compared to a profit of $34 million last year.

Edible oil products had a $28 million pretax profit, down from $30 million the previous year. The milling products sector also was down with pretax profit of $24 million, compared to $39 million a year earlier.

Bunge said it expects a strong close to the year, and a stronger performance for its sugar and bioenergy segment in 2012.

Drew Burke, chief financial officer, said, "We expect a good close to the year. Performance in our agribusiness operations in the Northern Hemisphere, which have been pressured recently by tight supplies, should benefit from the harvests which are currently underway. Global trade of grains remains solid, and we expect our grain merchandising business to perform well, though margins have decreased from levels seen in the first half of the year.

"In sugar & bioenergy, we expect to mill approximately 14 to 14.5 million tonnes of sugarcane for the full year, which is about a million tonnes below our previous estimate. This reduction, which is generally in line with the decrease in the overall industry, reflects the impact of adverse weather in the Center-South region of Brazil. For 2012, we expect to mill 17 to 19 million tonnes of sugarcane. Pricing should remain supported by strong demand, tight ethanol supplies in Brazil and the need to encourage Brazilian capacity expansion.

"In edible oils the tough competitive environment we have seen in Brazil is showing signs of improvement and the harvest should ease the tight raw material supply situation in Europe. Milling should continue to perform well.โ€
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