ST. LOUIS, MISSOURI, U.S. — Bunge reported on Oct. 24 a net loss of $137 million for the third quarter, compared with a profit of $289 million a year earlier, due to its weak sugar business.
The per-share loss was 94¢ per share, against a profit of $1.92 a year earlier. The sugar and bioenergy division reported a loss of $19 million. Bunge recorded an after-tax charge of $415 million primarily related to that business.
Revenue was $14.7 billion, compared to revenue of $16.5 billion a year ago.
Bunge said its food & ingredients segment continued at a record pace, but the sugar & bioenergy segment was hurt by Brazilian milling operations that faced bad weather and low global sugar prices. Soren Schroder, Bunge’s chief executive officer, said the company is exploring all alternatives for that business segment.
“Given the challenges facing the Brazilian industry, we have commenced a comprehensive process to explore all alternatives to optimize the value of this business,” he said.
Agribusiness performed well, though results were lower than the year-ago record third quarter.
Strong margins and volumes in Bunge’s Brazilian processing and merchandising operations were the primary driver of results in the quarter.
In Argentina, oilseed processing results improved with a larger soybean crop and a pick-up in farmer selling but did not fully offset lower earnings in grain merchandising, which was negatively impacted by the poor wheat crop.
Results in Europe and Asia were similar to last year. Oilseed processing capacity utilization in North America was low for both soybeans and canola, impacted by last year’s drought, which reduced available raw material.
U.S. grain exports were also low, reflecting the impact of last summer’s extreme drought on corn production and the delay to this year’s harvests caused by late planting. Results in the third quarter included an $8 million gain related to the sale of Bunge’s investment in a U.S. biofuels company.
Improved performance in the company’s Brazilian and Mexican wheat milling operations more than offset lower results in corn milling which, after a strong first half of the year, experienced softer volumes as some customers delayed purchases until the arrival of new crop.
Contributing to the improved wheat milling results were a combination of lower industrial costs and higher margins. In Brazil, margins also benefitted from good raw material procurement strategies in a market of tight wheat supplies and high flour prices. Rice milling results were similar to last year.
Results in the third quarter included a $7 million charge related to transactional taxes in Brazil.
"Agribusiness should have a strong fourth quarter. Oilseed processing margins in North America, Europe and China are very good, driven by the combination of large oilseed harvests, lean customer inventories and improving livestock production margins,” said Drew Burke, chief financial officer. “North America and the Black Sea should see strong grain exports, as the world restocks inventories after an extended period of tight supplies.
“Food & ingredient's momentum is expected to continue into the fourth quarter. Edible oils should benefit from the seasonal growth in oils, margarines and bakery ingredients consumption. Tight wheat supplies in Brazil should continue to support high domestic flour prices, and corn milling volumes and margins should increase with the arrival of new crop corn in the U.S.”
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