In a Feb. 15 conference call with analysts to discuss fiscal 2016 results, Soren Schroder, chief executive officer, said the company took several steps during the past year to improve its value-added portfolio.
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| Soren Schroder, chief executive officer. |
“Our success in acquiring Walter Rau Neusser was a small but important step toward building out our global (specialty oils) business, and the acquisition of Ana Gida, a leading bottle oil company in Turkey, will complement our existing crush and oil business there and exposes us to growth in a very dynamic region,” Schroder said. “Grupo Minsa, a leading North American corn flour producer, will complement our existing wheat milling business in Mexico and increase our value-added offerings to B2B customers in the United States.”
Another priority for Bunge is perfecting its global footprint. Schroder said the focus on maintaining a strong global footprint is one of Bunge’s biggest strengths, and has allowed the company to serve customers year round. Prioritizing a global footprint also has reduced volatility and exposed the company to growth, he said.
“In Brazil, we replaced our Rio de Janeiro mill with a lower cost, more efficient facility and will advance in operating our export terminal in New Orleans,” he said. “We completed a multi-seed crush plant in the Ukraine same location as our port facility and we have our first rapeseed plant coming on in China as we speak. In addition, we are acquiring two million tonnes of soy crush capacity in Northern Europe, which complements our existing Southern European (investments) very nicely. We expect to close on that transaction in the first quarter.”
Partnerships also are a priority for Bunge, Schroder said. The company has created strategic joint ventures in Brazil, Canada and Vietnam that are improving its competitive position and allowing the company to grow in a capital-efficient way. Bunge also has expanded access to critical markets through distribution partnerships, such as OSI and OFI in the Philippines for oil distribution in the Asia-Pacific region.
Keeping an eye on costs also is in the crosshairs for Bunge.
“In 2014, we committed to $345 million improvement program through 2017, of which we have achieved $255 million up to date,” Schroder said. “Our target in 2016 was $125 million, which we exceeded by $10 million and we have additional $100 million planned for this year.
“We also continue to build a strong global talent bench and we’ve been active on the sustainability front, making sure that our value chains minimize carbon emissions, optimized water use, and to protect against deforestation.”
Going forward, though, Schroder said the No. 1 focus at Bunge will be on growing earnings in a meaningful way, and he believes the conditions are favorable to achieve that goal.
“The Agribusiness environment looks better now than at the same time last year,” he said. “Strong demand for proteins and oils will increase crushed utilization and margins and growth commercialization of crops will normalize with the arrival of record crops in South America. Including ingredients, we expect 2017 to be a year of growth and earnings, driven by an increased share of value-added products and overall volume. In sugar milling, we are confident in another drop in earnings while we continue to look for the best way to reduce exposure to the business. We are very focused on building an industry-leading integrated agri-food business focused on grains and oilseeds.”
