Global crop trader and processor Bunge lifted its 2023 outlook on Thursday after its third-quarter profit topped Wall Street expectations, though earnings were lower year-on-year.
Solid crushing results in Brazil, Asia and North America, and good vegetable oil demand helped the world's largest oilseed processor offset weaker results in Argentina, where a severe drought slashed crop harvests this year.
The earnings beat comes as Bunge is working to close a merger deal with crop handler Viterra by mid-2024 that would create a global agribusiness powerhouse but which has sparked scrutiny from regulators.
Bunge shares rallied 5% to $107.30 on the company's rosier 2023 outlook, its second guidance lift in as many quarters. The company expects annual adjusted earnings of $12.50 a share, up from a prior forecast of $11.75 amid favorable margins and solid results in the year so far.
Strong Brazilian crop exports and soaring demand for vegetable oils to make renewable fuels have helped lift revenue for Bunge and agribusiness peers such as Archer-Daniels-Midland and Cargill. But rising costs, volatile markets and supply disruptions in places like Argentina and war-torn Ukraine have dented earnings at times.
"While being pretty balanced globally has helped us deliver, our most complete footprint is South America and especially Brazil. So the record crop there was good for our export system as well as our crushing system," said CEO Greg Heckman.
Weaker U.S. soy exports, meanwhile, underpinned North American crush margins, he added.
Bunge's Agribusiness segment, its largest in terms of volumes and revenue, posted an 11% drop in adjusted profit due largely to weak merchandising results. But full-year guidance was increased to be in line record earnings for the segment last year.
Merchandising could rebound next year with another large Brazilian harvest and a recovery from drought in Argentina, Heckman said. China's soybean imports next year were seen flat while corn imports would likely be higher, though "any surprises there could be to the upside on volume," he said.
Earnings from Refined & Specialty Oils rose 18% and Bunge expects 2023 earnings from the segment, its second largest, to improve from a record 2022.
The company reported an adjusted profit of $2.99 per share for the three months ended Sept. 30, higher than analysts' average estimate of $2.50 per share, according to LSEG data, but down from adjusted earnings of $3.45 a share in the same quarter last year.
Reporting by Karl Plume; additional reporting by Tanay Dhumal in Bengaluru; editing by Tasim Zahid, Susan Fenton and Jonathan Oatis