Bunge Mohio Pacficio
Bunge said volumes benefited from the contribution of its recently acquired Pacifico mill and additional market share gains. 
WHITE PLAINS, NEW YORK, U.S. — Net income attributable to Bunge in the third quarter ended Sept. 30 totaled $116 million, equal to 83¢ per share on the common stock, down 49% from $229 million, or $1.56 per share, in the same period of 2015. Total segment EBIT also fell 49%, to $213 million from $414 million a year ago.

Net sales for the quarter were $11.423 billion, up slightly from the year before at $10.762 billion.
Bunge CEO Soren Schroder
Soren Schroder, Bunge’s chief executive officer.

“Challenging market conditions and slow farmer selling led to a lower-than-expected quarter in Agribusiness,” said Soren Schroder, Bunge’s chief executive officer, when results were announced on Nov. 2.  “However, performance improvement efforts and better pricing drove higher results in Food & Ingredients and Sugar & Bioenergy. Year to date, we have delivered over $90 million of cost and efficiency benefits toward our full-year target of $125 million. We are also taking important steps to execute our strategy and for 2017 see strong growth potential in our Agribusiness, Foods and Sugar Milling businesses.”

Bunge’s Agribusiness segment earnings for the third quarter were $83 million, down 77% from $369 million in the same period of last year. Bunge said the combination of smaller-than-expected soy and corn crops in South America, due to adverse weather, and slow farmer selling negatively affected the company’s Brazilian and Argentine origination and soy processing results. Historically, Brazilian farmers price a portion of their next year’s production during the third quarter prior to planting, but with the change in market conditions farmers deferred sales in hope of higher prices, the company said.

Bunge CFO Drew Burke
Drew Burke, chief financial officer. 

“The agribusiness environment has improved with the arrival of harvests in the Northern Hemisphere, driving higher margins and utilizations in our North American and European oilseed processing and grain handling operations,” said Drew Burke, chief financial officer. “Soybean meal demand should increase as feed formulations normalize, reflecting robust underlying demand for proteins. Slow farmer selling in South America is likely to persist through the end of the year.”

Also affecting Grains was lower risk management contributions as last year’s results benefited from the recovery of approximately $50 million of losses on open positions from the second quarter, Bunge said. In North America and Europe, results in Grains were comparable to last year as higher origination and export volumes were largely offset by lower margins. The Agribusiness segment had a total volume of 35.079 million tonnes, down slightly from 36.154 million tonnes in the same period of last year.

Higher results in Brazil were the primary driver of improved performance in the Milling Products segment. Earnings for the third quarter were $52 million, up 62.5% from $32 million in the same period last year. Bunge said volumes benefited from the contribution of its recently acquired Pacifico mill and additional market share gains. Higher margins were driven by increased efficiency, improved product mix and favorable raw material sourcing, Bunge said. Volumes and margins in Brazil are back to levels achieved in 2014 prior to the country’s economic crisis. Partially offsetting these improvements, results in Mexico were lower due to the combination of the devaluation of the peso and competitive pressures. Total Milling Products volumes were 1.153 million tonnes, up slightly from 1.064 million tonnes in the same period of last year.

In August, Bunge reached an agreement to invest in Grupo Minsa S.A.B. de C.V., a corn flour producer, securing a controlling financial interest in the company. As part of the transaction, Bunge will take management control of four mills in Mexico and two mills in the U.S. The transaction is expected to close early 2017.

“Grupo Minsa, a leading corn flour producer, will complement our existing wheat milling business in Mexico and increase our value added offerings to B2B customers in the U.S.,” Schroder said.

Higher earnings in the Edible Oils segment primarily were driven by improved performances in Brazil and Europe. In the third quarter, Edible Oils earnings were $34 million, up sharply from $13 million in the same period of last year. In Brazil, volumes and profits were up in most key categories despite the tough market conditions, reflecting actions to grow market share, contain costs and tighten integration with upstream Agribusiness, the company said. In Europe, higher results were driven by reduced costs and more favorable product mix. Slightly higher results in Asia were driven by improved product mix of three specialty oils and fats in India. Results in North America were comparable to last year as lower margins were offset by higher volumes and decreased industrial costs driven in part by recent footprint restructuring. Edible Oils total volume for the third quarter was 1.762 million tonnes, up from 1.733 million tonnes in the same period of last year.

On Aug. 5, Bunge and Cargill entered into an agreement under which Bunge will acquire from Cargill two oilseed processing plants and businesses in the Netherlands and France. In the Netherlands, the transaction includes Cargill’s soybean and rapeseed crush and soybean oil refining facility in the Port of Amsterdam as well as part of the bulk port terminal assets dedicated to supporting discharge and storage of raw materials for the crush plant. In France, Bunge will acquire Cargill’s soybean and rapeseed crush facility located in the Port of Brest. The aggregate annual processing capacity at the two locations is approximately 2 million tonnes.

“We expect a solid fourth quarter and are confident about our growth prospects in 2017,” Schroder said. “Northern Hemisphere oilseed processing and export elevation margins are up with the arrival of harvests and should remain healthy into next year. Brazil and Argentina should produce record harvests, and with a relatively small volume of crops sold in advance, we expect active commercialization during the first half of next year. In addition, global demand and trade should remain robust.”