Grain News


Bunge Reports 2Q Net Income of $272 Million, Up From $110 Million in 2Q 2013

Date Posted: July 31, 2014

White Plains, NY—Bunge Limited reported July 31 its second quarter 2014 financial results.

Full Bunge Report

„Overview

Soren Schroder, Bunge's Chief Executive Officer, stated, "We had a strong performance in the second quarter with all segments reporting higher year-over-year results.

"Strong global oilseed processing margins, driven by big crops and growing demand, led to significantly better results in agribusiness. Improved operational and commercial performance and the addition of our new wheat mills in Mexico contributed to a record quarter in food & ingredients.

"The results demonstrate the potential of this segment and the value of managing integrated oilseed and grain chains.

"Sugar & bioenergy performed as expected, due in part to our continued progress in containing costs and increasing productivity.

"We expect the momentum of the second quarter to carry through for the remainder of the year and that we will meet or exceed our targeted full-year combined returns in agribusiness and food & ingredients of 1.5 points above cost of capital.

"In agribusiness, big Northern Hemisphere crops combined with strong global livestock economics should continue to drive demand and encourage trade.

"In food & ingredients, we expect continued strong results as our performance improvement initiatives reach greater scale.

"And in sugar & bioenergy, we are now entering the peak milling season and continue to forecast full year breakeven EBIT.

"The strategic review of our sugarcane milling business is progressing.

"We are running the business free cash flow neutral as we explore various alternatives.

"We remain committed to completing the review and achieving the best result for shareholders.

"During the quarter we returned $108 million to Bunge's shareholders through our share repurchase program."

„Second Quarter Results

Agribusiness

A strong global oilseed processing environment in most regions of the world was the primary driver of higher results in the quarter. In the Southern Hemisphere, record soybean crops, strong export demand and good farmer selling led to solid processing margins.

Our team in Brazil continued to do an excellent job in managing logistical flows of crops through a complicated interior structure resulting in lower transportation and execution costs.

Oilseed processing results were also higher in the Northern Hemisphere led by strong softseed margins in Canada and soybean margins in Europe.

U.S. soybean processing results were comparable to last year. Results in China were down.

Grain origination results were within expectations, but lower than last year primarily due to Brazilian farmers postponing commercialization of the safrinha corn crop as a result of the drop in market prices.

Risk management results were comparable to last year and in line with expectations.

Edible Oil Products

Strong results in the quarter were driven by improved performances in Brazil and in Europe with both regions expanding margins and tightly managing costs and working capital.

While margins expanded in North America, one-time costs in logistics due to backlogs and some short-term cost increases in maintenance led to lower results in this region.

Results in Argentina were flat with last year; results in Asia were slightly lower.

Milling Products

Record results in the quarter were driven by strong performances in our wheat milling operations in Brazil and Mexico.

In Brazil, results benefitted from an increased focus on margins and driving greater efficiencies in our plants and supply chain network.

Milling results in Mexico reflected our new wheat milling acquisition and synergies from its integration with our existing operation.

Results in U.S. corn milling were lower than last year primarily due to lower margins.

Results in rice milling were comparable to last year.

Sugar & Bioenergy

Higher results in our sugarcane milling and biofuels businesses more than offset lower results in our trading & merchandising operation.

Improved performance in sugarcane milling was driven by higher crush volumes, increased energy sales, improved Brazilian ethanol prices and approximately $10 million of mark-to-market gains related to hedges on our forward sugar sales.

The second quarter is typically a weak period for milling operations as it marks the beginning of the sugarcane harvest in the Center-South of Brazil when the sugar content of the sugarcane is at its lowest level.

Consequently, mills produce less sugar and ethanol per unit of sugarcane milled than they will in the second half of the year when the yield increases.

Results in our biofuels business were higher than last year, primarily due to the favorable ethanol margin environment in the U.S. and the contribution from our new corn wet milling joint venture in Argentina.

Weaker results in our trading & merchandising business were primarily due to lower margins.

For more information, call 914-684-3246.

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