Results in the quarter were impacted by losses in the company’s grain trading and distribution business, and a temporarily depressed crushing environment in China. Sales were down to $13.5 billion from $14.8 billion in the same quarter a year ago.
“We continue to target full-year, combined returns in agribusiness and food & ingredients at 1.5 points above cost of capital. Our global operational improvement programs and working capital management initiatives are progressing well,” said Soren Schroder, Bunge’s chief executive officer. “The Bunge team is focused on delivering strong, long-term shareholder value through improved operational performance in our core businesses, disciplined capital management, and a balanced approach to capital allocation.
“We are actively pursuing strategic alternatives for the Brazilian sugarcane business with the goal of maximizing value for shareholders. We are also continuing with cost and productivity improvements at our mills, which will become evident through the crushing season. During the quarter we returned $92 million to Bunge's shareholders through our share repurchase program and expect to repurchase another $108 million during the second quarter.”
Results in the quarter for edible oil products reflect normal seasonal weakness and were lower than last year. Improved performances in the U.S., Europe and Asia businesses were more than offset by lower results in Brazil and Canada.
Higher margins in the company’s Brazilian wheat milling business were driven by continued focus on extracting higher value through improved product and channel mix and tight cost control. These gains in milling products more than offset lower volumes of lower margin sales. Wheat milling results in Mexico benefited from the new Altex acquisition, which performed to plan in the quarter. Results in rice milling were comparable to last year. Results in our U.S. corn milling were lower than last year primarily due to lower margins and higher energy costs.
“We remain confident about the full year. Demand for our products in most regions has been strong, and we expect these conditions to persist throughout the year. In the near term, our South American operations, which are in the early parts of harvest, will be the primary driver of results,” said Drew Burke, chief financial officer.
“With the recent pick-up in pace of farmer selling and strong export demand for soybean meal, crush margins and utilizations in South America should remain strong through September when export demand begins to shift back to North America. In China, the second quarter will remain challenging as the industry works through the excess supply of soybeans; however, we expect margins in the second half of the year to improve significantly as supply and demand come into balance. In the Northern Hemisphere we are entering the slow season; however, forward crush margins for soy and soft seeds look good.”