Grain News


Bunge Reports 4Q Net Income of $115 Million, Compared to a $610 Million Net Loss in 4Q 2012; and Full-Year Net Income of $230 Million

Date Posted: February 13, 2014

White Plains, NY—Bunge Limited (NYSE:BG) reported Feb. 13 its fourth quarter and full-year 2013 financial results.

Full Bunge Report

Overview

Soren Schroder, Bunge's Chief Executive Officer stated, "Agribusiness and food & ingredients finished the year on a strong note. On a combined, full-year basis, agribusiness, edible oils and milling segments generated record results of approximately $1.3 billion in EBIT and returns above cost of capital.

"Our agribusiness team effectively managed risks as markets transitioned from extreme tightness to emerging surpluses, while capitalizing on strong oilseed processing margins in the Northern Hemisphere and navigating unpredictable farmer selling patterns.

"Food & ingredients achieved record quarter and full-year results with all regions reporting higher year-over-year annual earnings.

"Our food team has made big strides in its effort to engage with customers and extract more value from operations and category management, which are all part of a larger performance management program we are rolling out across our business.

"Our sugar and ethanol trading & merchandising operations performed well in the quarter and full year; however, our Brazilian sugarcane milling operations continued to be impacted by depressed global sugar prices, low sucrose cane content (ATR) and capped ethanol prices in Brazil.

"In the quarter we took several restructuring & impairment charges, which is part of our ongoing effort to improve the cost structure of our industrial business.

"We made good progress during the year to reduce costs in our milling operations, and the efforts will continue. We are actively engaged in our strategic review to optimize the value of this business and have retained financial advisors to assist in the process.

"We enter 2014 with good momentum. Lower commodity prices are spurring growth in demand and trade. Soybean crops in South America are on track to set another record level of production.

"Similar to last year, this will put a premium on logistics expertise and assets, which fits our capabilities well.

"We expect our food & ingredients segment to extract even greater value from the downstream chains, and we will have incremental contribution from our acquisition of Grupo Altex's wheat mills in Mexico, which we completed at the end of 2013.

"Lastly, we believe our strong financial position provides us the opportunity to return capital to our shareholders as part of our balanced approach to allocating capital.

"As a result, commencing in the first quarter we intend to repurchase $200 million of our common shares and will continue to be focused on our use of capital to maximize returns as we move through 2014."

Fourth Quarter Results

Agribusiness

Agribusiness produced solid results, more than doubling a challenging year-ago period.

Higher results in the quarter were primarily driven by strong oilseed processing margins in North America, Europe and China, which benefited from the combination of strong demand, large harvests and a lack of oilseed exports out of South America. Higher results in our merchandising operations were driven b

y large export programs to Asia, the Middle East and Europe.

In South America, which was in the slow season, domestic oilseed processing results were higher in Brazil and Argentina.

Results in the fourth quarter 2012 included charges of $76 million, primarily related to the loss on sale of certain long-term recoverable tax assets for cash.

Sugar & Bioenergy

Higher results in the quarter were driven by higher margins and volumes in our trading & merchandising operations and improved performance in our U.S. biofuels business, which benefited from the robust ethanol production environment.

Results in our Brazilian sugarcane milling operations were lower than last year and generated a loss in the quarter, as expected.

Higher cane milling volume and ethanol prices were more than offset by lower ATR and sugar prices.

Results in the fourth quarter included approximately $10 million of restructuring and impairment charges related to improving the cost structure of our Brazilian milling operations.

Edible Oil Products

The fourth quarter was the strongest quarter of the year as we drove higher margins through improved management of pricing, new product introduction, and improved operational efficiency.

While we delivered a record year, quarterly results compared to last year were slightly lower on an adjusted basis as improved performances in Europe and North America were more than offset by lower results in Brazil and Asia.

Results in the fourth quarter 2012 included a $7 million charge related to the loss on sale of certain long-term recoverable tax assets for cash and a $16 million valuation adjustment for certain value added taxes in Brazil.

Milling Products

Higher results in the quarter were primarily driven by improved performances in corn milling and our Brazilian wheat milling operations.

Corn milling results benefited from improved margins and higher volumes, which were due in part to the arrival of the U.S. corn crop and strong demand from customers who had delayed purchases in anticipation of record corn production.

In Brazil, results benefited from improved customer mix and well-executed wheat import programs from North America, which replaced wheat volumes from Argentina.

Wheat milling results in Mexico were solid and up from last year, and rice milling results were comparable to the year-ago period.

Results in the fourth quarter 2012 included a $6 million valuation adjustment for certain value added taxes in Brazil.

Outlook

Drew Burke, Chief Financial Officer, stated, "In agribusiness, global demand is strong.

"With the reduction in crop prices, livestock production economics are generally good around the world, which is positive for oilseed processing margins and trade.

"South American crops are progressing well, and soon soy export demand will be shifting from the U.S. to this region.

"Handling and transporting this record crop will pose significant logistical challenges, particularly in Brazil, which should provide us with attractive market opportunities considering our network of assets and experience in the region.

"In food & ingredients, we expect continued strong performance, as we continue to strengthen our operations, invest in innovation and leverage our customer relationships across regions and businesses.

"Demand in our core categories is strong and our businesses are well placed to take full advantage of that dynamic.

"Similar to past years, we expect results to be seasonally weaker in the first quarter and progressively improve throughout the year.

"Considering global sugar prices and the uncertainty surrounding further gasoline price increases in Brazil, we are forecasting results in sugar & bioenergy to be about breakeven.

"We will manage this business to be cash flow positive, limiting capital investment to agricultural and industrial maintenance and efficiency projects only.

"Additionally, we expect the following for 2014: depreciation, depletion and amortization of approximately $560 million; capital expenditures of approximately $900 million; and a full-year tax rate of approximately 23%."

For more information, call 914-684-3246.

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