WHITE PLAINS, NEW YORK, U.S. — Bunge Ltd. reported on July 25 a 50% drop in earnings for the second quarter, due to last year’s poor grain and oilseed crops.
The company reported net earnings of $136 million for the quarter, or 75¢ per share, compared to $274 million, or $1.78 per share, for the same period a year ago. Revenue for the quarter was $15.5 billion, compared with revenue of $14.5 billion last year.
“We navigated the choppy markets well but faced some challenges in North America,
Europe and Argentina, which suffered from the continued effects of last year’s poor oilseed and grain crops,” said Soren Schroder, Bunge’s chief executive officer. “The first half of the year came in generally as we expected, and we are anticipating a strong second half. In the second quarter, in agribusiness our Brazilian operations generated strong results executing record volumes under challenging logistical conditions.”
Agribusiness earnings before interest and tax were $170 million, compared to $386 million in the same period last year. Bunge said strong margins and volumes in its Brazilian operations were the primary driver of results in the quarter. Tight sunflower and rape seed supplies in Europe and last year’s poor grain crops in the Black Sea negatively impacted results in this region.
Oilseed processing capacity utilization in North America was low for both soybeans and canola, hampered by last year’s drought which has reduced available raw material. U.S. grain exports were weak, reflecting the impact of the extreme drought last summer on corn production.
Results in Argentina were lower due in part to slow farmer selling and the poor wheat crop.
The sugar & bioenergy segment posted a loss of $3 million, an improvement from the $28 million loss reported last year. Results were higher in the quarter due to improved performance in all parts of the segment.
Trading and merchandising benefited from higher volumes and margins on export programs and good risk management. In sugarcane milling higher ethanol prices and lower production costs, driven by the combination of higher cane yields, ATR and crush volume, more than offset lower sugar prices.
U.S. biofuels were higher due to improved margins in the company’s ethanol joint venture.
Excluding last year’s $36 million gain related to the acquisition of a controlling interest in a
Mexican wheat milling business, Bunge’s results in milling products for the quarter were higher driven by improved performances in its Brazilian wheat milling and U.S. corn dry milling operations.
Contributing to the better results were greater efficiencies in operations, working more closely with its largest customers on procurement strategies and the successful integration of its Mexico wheat mill acquisition, Bunge said.
“We are confident about the second half of the year. In agribusiness, export demand for agricultural commodities should be strong due to the combination of lean customer inventory pipelines resulting from delays in exporting product out of South America, and lower prices driven by what are expected to be large new crops in the Northern Hemisphere,” said Drew Burke, chief financial officer. “Farmer selling in South America has picked up, supporting near-term oilseed processing margins. Our oilseed processing and merchandising operations in North America and Europe will continue to be impacted by low capacity utilizations due to tight supplies until new crops are harvested. While the critical growing period is still in front of us, U.S. soybean and European softseed crops are developing well, supporting good forward processing margins in these regions.”
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