WHITE PLAINS, NEW YORK, U.S. — Bunge reported on Feb. 13 a significant increase in 2013 earnings, due to record results from its agribusiness, edible oils and milling segments.
Combined, the three segments generated approximately $1.3 billion in EBIT and returns above cost of capital, said Soren Schroder, Bunge’s chief executive officer stated.
Earnings for the year increased $306 million or $1.55 per share, compared to $64 million or 19¢ per share in 2012. The company returned to profit in the fourth quarter, with earnings for $138 million or 78¢ per share, compared to a loss of $599 million or $4.17 per share in the same period in 2012.
“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,” Schroder said. “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.”
The agribusiness segment more than doubled its results from the challenging year-ago period, Bunge said. 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 Bunge’s merchandising operations were driven by 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.
“Our sugar and ethanol trading and 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,” Schroder said. “In the quarter we took several restructuring and 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.”
Higher results for the quarter in the milling segment were primarily driven by improved performances in corn milling and 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.
“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,” Schroder said. “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.”
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