WHITE PLAINS, NEW YORK, U.S. — Bunge Limited reported on Feb. 12 that net profit for the year increased to $611 million or $4.15 per share from $230 million or $1.55 per share a year ago.
Revenue for the year was $57.828 billion, down from $61.347 billion in 2013.
Soren Schroder, chief executive officer, said the year was one of higher returns and strong cash flow from operations, driven by steady commercial and operational improvements.
Results for the fourth quarter, however, were down 28% to $82 million or 56¢ per share, compared with $115 million or 78¢ per share a year earlier. Excluding special items, earnings per share were $1.20, down from $1.35 a year earlier.
Revenue for the quarter dropped to $13.898 billion from $16.375 billion. Analysts had expected $16.72 billion.
"Fourth quarter earnings were close to our expectations, adjusting for impairment charges, mark-to-market impacts and using our normalized tax rate of 28%. Our North American and European operations performed exceptionally well, capitalizing on strong soybean processing margins and executing large export programs,” Schroder said. “Food & Ingredients continued to make advances with its commercial and operational excellence programs, and generated higher full-year results than in 2013. Sugarcane milling finished the year adjusted free cash flow neutral, which was our most important goal for that business.
"In China we did not realize the improvement in crush margins that we expected in the fourth quarter, and as the soybean basis delivered to China moved sharply lower during the last half of December, we incurred a loss on the value of our inventory pipeline. Looking forward, the Chinese market is improving, and we expect a return to more normal results.
"Our objective of reducing our exposure to the Brazilian sugarcane milling sector is unchanged. In the meantime, our focus is on improving the operations and achieving our short-term financial targets. The business is stable, and we have made significant progress improving agronomic efficiencies and reducing fixed costs. This, combined with an improved outlook for ethanol pricing in Brazil, strong cogeneration margins and hedged sugar, increases our confidence that 2015 will be a year of further improvement.
In the fourth quarter, results were impacted by approximately $80 million of new mark-to-market charges in the company’s North American oilseed processing business and on bunker fuel hedges.
In Oilseeds, results were driven by a record performance in North American operations, which benefitted from high crush margins resulting from the combination of strong global demand, record harvests and a lack of soybean exports out of South America. However, all other regions experienced lower oilseed processing results.
While European soybean crushing performed well, softseed margins were down primarily due to slower farmer selling of sunseeds. In South America, which was in its seasonally slow period, continued farmer retention of soybeans impacted crush utilizations and profitability.
Results in Asia were down due to lower results in our China crushing operations which were impacted by deteriorating margins toward the end of the quarter and a $30 million reduction in value of the company’s soybean inventory pipeline due to the significant drop in basis on beans delivered to China.
In Grains, U.S. operations performed well as origination and elevation margins expanded with the arrival of record harvests and strong soybean export demand. Grain results in South America improved as farmer selling of new crop corn picked up with the rise in global prices and weaker local currencies. Results in our European distribution operations were also higher.
Higher wheat milling results were more than offset by lower results in corn milling, which experienced reduced volumes and margins. In Brazil, wheat milling results were comparable to last year.
Higher results in Mexico were driven by the addition of new wheat mills. The integration of these mills continues to progress well with synergies tracking to expectations. Results in Mexico were negatively impacted by approximately $5 million of foreign exchange losses resulting from the significant devaluation of the peso on U.S. dollar-denominated inventory. An offsetting gain is expected in 2015 when the inventories are sold. Rice milling results were slightly higher than last year.
Higher results in the quarter for Sugar & Bioenergy were driven by improved performances in the sugarcane milling and biofuels businesses. In milling, lower costs and higher cogeneration volumes and margins more than offset lower sugar and Brazilian ethanol prices and crush volume. The biofuels business benefitted from the robust ethanol production environment in the U.S.
Looking ahead, global demand for grain and oilseeds is expected to remain solid, driven by large crops and growing global livestock production, said Drew Burke, chief financial officer.
“In Oilseeds, the current strong soybean processing conditions in North America and Europe should persist through the first quarter as they remain the primary sources of global supply until the South American crops become available. European rapeseed margins are expected to remain stable; however, sunseed margins are likely to be pressured until the second half of the year when new crop seeds arrive. Forward soybean processing margins in Brazil are solid, reflecting another year of record crop production. While volatility in China will likely continue due to industry overcapacity, the challenges we experienced in 2014 should be behind us. In Grains, our operations should continue to benefit from large global crops and increasing trade, though farmer selling could be sporadic as they adjust to lower global prices.
"In Sugar & Bioenergy, we are continuing to manage the segment to be self-funding, limiting capital investment to agricultural and industrial maintenance and efficiency projects only. With the recent improved outlook for Brazilian ethanol pricing, strong cogeneration margins, and our sugar exposure largely hedged, we have increased confidence that the segment will finish the year profitable and free cash flow positive. Similar to past years, we expect results to be seasonally weaker in the first half of the year.
"Additionally, we expect the following for 2015: depreciation, depletion and amortization of approximately $635 million; capital expenditures of approximately $875 million; and a full-year tax rate of approximately 25%. While we continue to forecast our long term tax rate to be 23%, we expect our earnings mix in 2015 to be more heavily weighted toward higher tax jurisdictions."