WHITE PLAINS, NEW YORK, U.S. — Bunge’s performance for the third quarter ended Sept. 30 was negatively impacted by an 8.2% drop in sales for the Agribusiness segment. Sales in the Agribusiness segment — the company’s largest by revenue — dropped to $9.8 billion from $10.7 billion for the third quarter of 2013.

Net income for the third quarter was $294 million compared to a loss of $148 for the same period last year.

"Third-quarter results were lower than last year; however, Bunge is in a strong position to meet or exceed our full-year, combined return target of 1.5 points above cost of capital in Agribusiness and Food & Ingredients,” Soren Schroder, Bunge's chief executive officer said. "Adjusting for temporary mark-to-market impacts, Agribusiness results were within our range of expectations. The transition from tight to plentiful global grain and oilseed supplies, highlighted by falling prices and some of the slowest farmer selling in recent memory in South America, created a challenging market environment in the third quarter. Our Agribusiness team managed the associated risks well. Looking ahead, strong crushing margins and high utilizations at export facilities throughout the Northern Hemisphere should deliver a good fourth quarter.”

The company said its Agribusiness segment’s third quarter was characterized by very slow farmer selling driven by the significant drop in commodity prices. As a result, Bunge’s grain origination results were lower than last year, especially in South America. In Brazil, Bunge experienced the lowest level of forward selling of new crops in years and in Argentina farmers are holding soybeans as a hedge against inflation and currency devaluation. This, combined with the impact of approximately $80 million in temporary mark-to-market hedging losses in Bunge’s North American and European oilseed processing and distribution businesses, were the primary drivers of lower year-over-year results.

The Milling Products segments higher results were attributed to improved performance in Bunge’s Brazilian wheat milling business, which benefitted from improved margins and production yields, and the addition of Bunge’s new wheat mills in Mexico. The integration of these mills continues to progress well with synergies tracking to expectations, the company said. It has made improvements to the cost structure through reducing energy consumption, broadening raw material sourcing and streamlining the organizational structure. Results in corn and rice milling were comparable to last year. Third quarter 2013 results included a $7 million charge related to transactional taxes in Brazil.

“In Food & Ingredients, Milling continued its good performance and we made steady progress on our improvement efforts in Edible Oils, although results in that business were impacted by logistics issues and tight raw material supply in North America,” Schroder said. “The fourth quarter is a period of seasonally strong demand for Food & Ingredients, and this, combined with additional contributions from improvement initiatives, should help us reach another record year for the segment.”

Drew Burke, chief financial officer, noted that the company is expecting a strong fourth quarter.

"In Agribusiness, record U.S. harvests in combination with extremely slow farmer selling in South America and strong demand from the livestock sector have driven U.S. crush margins to historically strong levels,” he said. “Along with large softseed and grain crops in Europe, this will allow our crushing and exporting facilities in the Northern Hemisphere to operate at high run rates with good margins. We also expect about $60 million in mark-to-market reversals in the fourth quarter and additional reversals in the first quarter of 2015.

"In Food & Ingredients, we expect another record year. The fourth quarter is the seasonally strong holiday period when demand for flours, vegetable oils, margarines and shortenings increases. We will also have additional contributions from our performance improvement initiatives and our new wheat mills in Mexico. In Sugar & Bioenergy, we expect breakeven full-year segment EBIT and are managing the business to be free cash flow neutral. We have sufficient cane to crush approximately 20 million tonnes. However, at the end of September we were about 75% through the harvest, so weather remains an important factor in the length of the processing season.

"We expect our Q4 and 2014 full year tax rate to be approximately 23%, which is in line with our long-term range of 22-24%."