WHITE PLAINS, NEW YORK, U.S. — Bunge reported on April 26 that its first-quarter net income had declined to $92 million or 69¢ per share (excluding gains and charges) from $232 million or $1.49 per share in the same time period a year ago.
The agribusiness segment reported income of $197 million compared to income of $249 million a year ago. Agribusiness Grain merchandising benefited from a strong performance in South America due to the smaller U.S. grain harvests last fall, but results were lower when compared to an especially strong prior year period.
Higher oilseed processing results in Brazil and Canada were more than offset by lower results in the U.S. and Europe. Increased volume in the quarter was primarily driven by higher grain merchandising and oilseed processing in Europe, the addition of new grain facilities in the U.S., and our two new oilseed processing facilities in Asia that commenced operations after the first quarter of last year.
The milling segment reported income of $27 million for the first-quarter of 2012, compared to $33 million a year ago. Improved results in corn milling were more than offset by lower results in wheat milling, which experienced some challenges related to the implementation of a new SAP system that resulted in lost sales opportunities.
The sugar & bioenergy segment reported a loss of $33 million, compared to income of $2 million last year. Bunge said lower margins for ethanol depressed results.
The first quarter is the inter-harvest period in Brazil when sugarcane mills in the Center-South region are not operating and are selling sugar and ethanol inventories from the previous cane harvest. The loss in the quarter was primarily due to lower ethanol margins stemming from high cost inventory that was carried into the year from 2011, Bunge said. Brazilian market sales prices were pressured by a reduction in ethanol blending rates from 25% to 20% and increased volume of U.S. imports.
"We faced headwinds in the first quarter, as expected but are confident that we will deliver strong results in 2012,” said Alberto Weisser, Bunge's chairman and chief executive officer. "Looking ahead, margins should improve significantly in sugar & bioenergy with the new harvest and in fertilizer with the start of the traditional sales season later this year. Market conditions in agribusiness indicate cause for optimism. Supply and demand in oilseeds and grains is more balanced, which should support crush margins globally. Export shipments in key crops are up compared to last year and the second half of the year promises to be active in the Northern Hemisphere. Volatility should persist, but we feel confident that our risk management capabilities will enable Bunge to navigate the markets successfully."
"We are expecting a strong 2012 in agribusiness. It is currently the high season for oilseed processing in South America, and good global demand for protein meal and vegetable oil, as well as a pick-up in farmer selling following the recent increases in prices, should benefit oilseed processing margins in the region,” said Drew Burke, chief financial officer. “In the Northern Hemisphere, crush margins should improve from levels seen last year when the harvest begins in the second half of the year. Like last year, China crush margins are expected to improve throughout the year. In grain merchandising, tight global grain stocks and the potential for a record U.S corn crop should keep facilities running at high utilization levels come harvest.
"We are expecting to crush between 17 and 18 million tonnes of sugarcane this year, a slightly narrower range than previously communicated, which reflects the impact of dry weather in February and March. We are continuing our aggressive planting program in 2012 and are on track to reach in excess of 70,000 hectares of planted sugarcane. As a reminder, earnings in sugar & bioenergy reach their peak in the second half of the year.
"We expect a solid performance in food & ingredients with growth and positive contributions from new acquisitions.”