Bunge Reports Third Quarter 2018 Results

Quarter Ended
September 30,

Nine Months Ended
September 30,

US$ in millions, except per share data

2018

2017

2018

2017

Net income (loss) attributable to Bunge

$

365

$

92

$

332

$

220

Net income (loss) per common share from continuing
operations-diluted

$

2.39

$

0.59

$

2.08

$

1.38

Net income (loss) per common share from continuing
operations-diluted, adjusted ^(a)

$

2.52

$

0.75

$

2.64

$

1.28

Total Segment EBIT ^(a)

$

535

$

175

$

667

$

381

Certain gains & (charges) ^(b)

(38)

(29)

(108)

(41)

Total Segment EBIT, adjusted ^(a)

$

573

$

204

$

775

$

422

Agribusiness ^(c)

$

485

$

127

$

655

$

254

Oilseeds

$

367

$

88

$

473

$

182

Grains

$

118

$

39

$

182

$

72

Food & Ingredients ^(d)

$

62

$

64

$

162

$

153

Sugar & Bioenergy

$

3

$

8

$

(57)

$

11

Fertilizer

$

23

$

5

$

15

$

4

(a)

Total Segment earnings before interest and tax ("Total Segment EBIT"); Total Segment EBIT, adjusted; net income (loss) per common share from continuing operations-diluted, adjusted; adjusted funds from operations and ROIC are non-GAAP financial measures. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables attached to this press release and the accompanying slide presentation posted on Bunge's website.

(b) 

Certain gains & (charges) included in Total Segment EBIT.  See Additional Financial Information for detail.

(c)  

See footnote 12 for a description of the Oilseeds and Grains businesses in Bunge's Agribusiness segment.

(d)  

Includes Edible Oil Products and Milling Products segments.

(US$ in millions, except per share data)

Net Income (Loss)

Attributable to

Bunge

Earnings

Per Share

Diluted

Total Segment

EBIT⁽⁷⁾

Quarter Ended September 30,

2018

2017

2018

2017

2018

2017

Agribusiness: ⁽¹⁾

$

(20)

$

(19)

$

(0.14)

$

(0.14)

$

(21)

$

(24)

Severance, employee benefit, and other costs

(6)

(4)

(0.04)

(0.03)

(7)

(7)

Impairment charges

—

(15)

—

(0.11)

—

(17)

Loss on disposition of equity investment

(14)

—

(0.10)

—

(14)

—

Edible Oil Products: ⁽²⁾

$

(1)

$

(3)

$

(0.01)

$

(0.02)

$

(2)

$

(4)

Severance, employee benefit, and other costs

—

(2)

—

(0.01)

(1)

(3)

Impairment charges

—

(1)

—

(0.01)

—

(1)

Acquisition and integration costs

(1)

—

(0.01)

—

(1)

—

Milling Products: ⁽³⁾

$

—

$

(2)

$

—

$

(0.02)

$

—

$

(3)

Severance, employee benefit, and other costs

—

(2)

—

(0.02)

—

(2)

Impairment charges

—

—

—

—

—

(1)

Sugar & Bioenergy: ⁽⁴⁾

$

(3)

$

2

$

(0.02)

$

0.02

$

(3)

$

2

Severance, employee benefit, and other costs

(1)

(1)

(0.01)

—

(1)

(1)

Impairment charges

—

(1)

—

(0.01)

—

(1)

Indirect tax credits

—

8

—

0.05

—

8

Sugar restructuring charges

(2)

(4)

(0.01)

(0.02)

(2)

(4)

Income Taxes and Other Unallocated: ⁽⁶⁾

$

6

$

—

$

0.04

$

—

$

(12)

$

—

Income tax benefits

15

—

0.11

—

—

—

Loss on extinguishment of debt

(9)

—

(0.07)

—

(12)

—

Total

$

(18)

$

(22)

$

(0.13)

$

(0.16)

$

(38)

$

(29)

(US$ in millions, except per share data)

Net Income (Loss)

Attributable to

Bunge

Earnings

Per Share

Diluted

Total Segment

EBIT⁽⁷⁾

Nine Months Ended September 30,

2018

2017

2018

2017

2018

2017

Agribusiness: ⁽¹⁾

$

(37)

$

(19)

$

(0.26)

$

(0.14)

$

(43)

$

(24)

Severance, employee benefit, and other costs

(24)

(4)

(0.17)

(0.03)

(30)

(7)

Impairment charges

—

(15)

—

(0.11)

—

(17)

Gain (loss), net on disposition of equity investment and
subsidiary

(13)

—

(0.09)

—

(13)

—

Edible Oil Products: ⁽²⁾

$

(15)

$

(3)

$

(0.11)

$

(0.02)

$

(17)

$

(4)

Severance, employee benefit, and other costs

(4)

(2)

(0.03)

(0.01)

(6)

(3)

Impairment charges

—

(1)

—

(0.01)

—

(1)

Acquisition and integration costs

(11)

—

(0.08)

—

(11)

—

Milling Products: ⁽³⁾

$

(2)

$

(2)

$

(0.01)

$

(0.02)

$

(3)

$

(3)

Severance, employee benefit, and other costs

(2)

(2)

(0.01)

(0.02)

(3)

(2)

Impairment charges

—

—

—

—

—

(1)

Sugar & Bioenergy: ⁽⁴⁾

$

(29)

$

(10)

$

(0.21)

$

(0.07)

$

(30)

$

(10)

Severance, employee benefit, and other costs

(5)

(1)

(0.04)

—

(6)

(1)

Impairment charges

—

(1)

—

(0.01)

—

(1)

Indirect tax credits

—

8

—

0.05

—

8

Sugar restructuring charges

(8)

(16)

(0.06)

(0.11)

(8)

(16)

Loss on disposition of equity investment

(16)

—

(0.11)

—

(16)

—

Fertilizer: ⁽⁵⁾

$

(2)

$

—

$

(0.01)

$

—

$

(3)

$

—

Severance, employee benefit, and other costs

(2)

—

(0.01)

—

(3)

—

Income Taxes and Other Unallocated: ⁽⁶⁾

$

6

$

49

$

0.04

$

0.35

$

(12)

$

—

Income tax benefits (charges)

15

49

0.11

0.35

—

—

Loss on extinguishment of debt

(9)

—

(0.07)

—

(12)

—

Total

$

(79)

$

15

$

(0.56)

$

0.10

$

(108)

$

(41)

Consolidated Earnings Data (Unaudited)

Quarter Ended
September 30,

Nine Months Ended
September 30, 2018

(US$ in millions, except per share data)

2018

2017

2018

2017

Net sales

$

11,412

$

11,423

$

34,200

$

34,189

Cost of goods sold

(10,494)

(10,934)

(32,356)

(32,886)

Gross profit

918

489

1,844

1,303

Selling, general and administrative expenses

(333)

(339)

(1,054)

(1,044)

Foreign exchange gains (losses)

(20)

1

(116)

108

Other income (expense) – net

(19)

25

9

24

EBIT attributable to noncontrolling interest ^{(a) (8)}

(11)

(1)

(16)

(10)

Total Segment EBIT ⁽⁷⁾

535

175

667

381

Interest income

7

9

21

29

Interest expense

(101)

(64)

(265)

(191)

Income tax (expense) benefit

(85)

(29)

(106)

(2)

Noncontrolling interest share of interest and tax ^{(a) (8)}

2

1

3

3

Income (loss) from continuing operations, net of tax

358

92

320

220

Income (loss) from discontinued operations, net of tax

7

—

12

—

Net income (loss) attributable to Bunge ⁽⁸⁾

365

92

332

220

Convertible preference share dividends

(8)

(8)

(25)

(25)

Net income (loss) available to Bunge common shareholders

$

357

$

84

$

307

$

195

Net income (loss) per common share diluted attributable to
Bunge common shareholders ⁽⁹⁾

Continuing operations

$

2.39

$

0.59

$

2.08

$

1.38

Discontinued operations

0.05

—

0.08

(0.01)

Net income (loss) per common share - diluted

$

2.44

$

0.59

$

2.16

$

1.37

Weighted–average common shares outstanding - diluted

150

142

142

141

(a) The line items "EBIT attributable to noncontrolling interest" and "Noncontrolling interest share of interest and tax" when combined, represent consolidated Net (income) loss attributed to noncontrolling interests on a U.S. GAAP basis of presentation.

Consolidated Segment Information (Unaudited)

Set forth below is a summary of certain earnings data and volumes by reportable segment.

Quarter Ended
September 30,

Nine Months Ended
September 30,

(US$ in millions, except volumes)

2018

2017

2018

2017

Volumes (in thousands of metric tons):

Agribusiness

37,690

37,316

110,893

108,512

Edible Oil Products

2,332

1,945

6,601

5,681

Milling Products

1,151

1,127

3,463

3,300

Sugar & Bioenergy

1,955

2,696

4,972

6,677

Fertilizer

448

422

874

830

Net sales:

Agribusiness

$

7,905

$

7,720

$

24,092

$

23,837

Edible Oil Products

2,298

2,027

6,772

5,877

Milling Products

427

397

1,262

1,169

Sugar & Bioenergy

629

1,158

1,774

3,052

Fertilizer

153

121

300

254

Total

$

11,412

$

11,423

$

34,200

$

34,189

Gross profit:

Agribusiness

$

674

$

260

$

1,231

$

695

Edible Oil Products

134

125

383

358

Milling Products

58

59

175

155

Sugar & Bioenergy

19

36

17

78

Fertilizer

33

9

38

17

Total

$

918

$

489

$

1,844

$

1,303

Selling, general and administrative expenses:

Agribusiness

$

(173)

$

(186)

$

(536)

$

(583)

Edible Oil Products

(100)

(87)

(305)

(258)

Milling Products

(31)

(33)

(103)

(103)

Sugar & Bioenergy

(22)

(31)

(91)

(87)

Fertilizer

(7)

(2)

(19)

(13)

Total

$

(333)

$

(339)

$

(1,054)

$

(1,044)

Foreign exchange gains (losses):

Agribusiness

$

(23)

$

1

$

(116)

$

93

Edible Oil Products

(2)

—

2

4

Milling Products

4

—

4

(1)

Sugar & Bioenergy

3

1

—

10

Fertilizer

(2)

(1)

(6)

2

Total

$

(20)

$

1

$

(116)

$

108

Segment EBIT:

Agribusiness

$

464

$

103

$

612

$

230

Edible Oil Products

30

34

69

98

Milling Products

30

23

73

48

Sugar & Bioenergy

—

10

(87)

1

Fertilizer

23

5

12

4

Unallocated ⁽⁶⁾

(12)

—

(12)

—

Total Segment EBIT ⁽⁷⁾

$

535

$

175

$

667

$

381

Condensed Consolidated Balance Sheets (Unaudited)

September 30,

December 31,

(US$ in millions)

2018

2017

Assets

Cash and cash equivalents

$

267

$

601

Trade accounts receivable, net

1,713

1,501

Inventories ⁽¹⁰⁾

7,183

5,074

Other current assets

3,948

3,227

Total current assets

13,111

10,403

Property, plant and equipment, net

5,164

5,310

Goodwill and other intangible assets, net

1,434

838

Investments in affiliates

454

461

Time deposits under trade structured finance program

—

315

Other non-current assets

1,283

1,544

Total assets

$

21,446

$

18,871

Liabilities and Equity

Short-term debt

$

2,057

$

304

Current portion of long-term debt

331

15

Letter of credit obligations under trade structured finance program

—

315

Trade accounts payable

3,274

3,395

Other current liabilities

2,639

2,186

Total current liabilities

8,301

6,215

Long-term debt

4,912

4,160

Other non-current liabilities

1,308

1,139

Total liabilities

14,521

11,514

Redeemable noncontrolling interest

438

—

Total equity

6,487

7,357

Total liabilities, redeemable noncontrolling interest and equity

$

21,446

$

18,871

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended
September 30,

(US$ in millions)

2018

2017

Operating Activities

Net income (loss) ⁽⁸⁾

$

345

$

227

Adjustments to reconcile net income (loss) to cash provided by (used for) operating
activities:

   Foreign exchange (gain) loss on net debt

134

28

   Depreciation, depletion and amortization

463

448

   Deferred income tax (benefit)

11

(8)

   Other, net

115

75

Changes in operating assets and liabilities, excluding the effects of acquisitions:

   Trade accounts receivable

(159)

(200)

   Inventories

(2,465)

(837)

   Secured advances to suppliers

(195)

101

   Trade accounts payable and accrued liabilities

182

265

   Advances on sales

(157)

(200)

   Net unrealized gain (loss) on derivative contracts

23

153

   Margin deposits

(266)

(26)

   Marketable securities

92

(147)

   Beneficial interest in securitized trade receivables ⁽¹¹⁾

(1,439)

(1,768)

   Other, net

31

(145)

    Cash provided by (used for) operating activities

(3,285)

(2,034)

Investing Activities

Payments made for capital expenditures

(318)

(485)

Acquisitions of businesses (net of cash acquired)

(968)

(369)

Proceeds from investments

1,080

398

Payments for investments

(1,163)

(686)

Proceeds from beneficial interest in securitized trade receivables ⁽¹¹⁾

1,432

1,732

Settlement of net investment hedges

124

(23)

Payments for investments in affiliates

(3)

(77)

Other, net

40

7

    Cash provided by (used for) investing activities

224

497

Financing Activities

Net borrowings (repayments) of short-term debt

1,799

750

Net proceeds (repayments) of long-term debt

1,142

402

Proceeds from the exercise of options for common shares

11

58

Dividends paid

(225)

(207)

Other, net

(18)

(34)

    Cash provided by (used for) financing activities

2,709

969

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

18

22

Net increase (decrease) in cash and cash equivalents, and restricted cash

(334)

(546)

Cash and cash equivalents, and restricted cash - beginning of period

605

938

Cash and cash equivalents, and restricted cash - end of period

$

271

$

392

Quarter Ended
September 30,

Nine Months Ended
September 30,

(US$ in millions)

2018

2017

2018

2017

Net income (loss) attributable to Bunge

$

365

$

92

$

332

$

220

Interest income

(7)

(9)

(21)

(29)

Interest expense

101

64

265

191

Income tax expense (benefit)

85

29

106

2

(Income) loss from discontinued operations, net of tax

(7)

—

(12)

—

Noncontrolling interest share of interest and tax

(2)

(1)

(3)

(3)

Total Segment EBIT

535

175

667

381

Certain (gains) and charges

38

29

108

41

Total Segment EBIT, adjusted

$

573

$

204

$

775

$

422

Quarter Ended
September 30,

Nine Months Ended
September 30,

(US$ in millions, except per share data)

2018

2017

2018

2017

Net Income (loss) attributable to Bunge

$

365

$

92

$

332

$

220

Adjusted for certain gains and charges:

     Severance, employee benefit, and other costs

7

9

37

9

     Impairment charges

—

17

—

17

     Sugar restructuring charges

2

4

8

16

     Indirect tax credits

—

(8)

—

(8)

     Acquisition and integration costs

1

—

11

—

     (Gain) loss, net on disposition of equity investment and subsidiary

14

—

29

—

     Loss on debt extinguishment

9

—

9

—

     Income tax charges (benefits)

(15)

—

(15)

(49)

Adjusted Net Income attributable to Bunge

383

114

411

205

     Discontinued operations

(7)

—

(12)

—

     Convertible preference shares dividends

—

(8)

(25)

(25)

Net income (loss) - adjusted (excluding certain gains & charges
and discontinued operations)

$

376

$

106

$

374

$

180

Weighted-average common shares outstanding - diluted

150

142

142

141

Net income (loss) per common share - diluted, adjusted
(excluding certain gains & charges and discontinued operations)

$

2.52

$

0.75

$

2.64

$

1.28

Quarter Ended
September 30,

Nine Months Ended
September 30,

2018

2017

2018

2017

Continuing operations:

Net income (loss) per common share - diluted adjusted
(excluding certain gains & charges and discontinued
operations)

$

2.52

$

0.75

$

2.64

$

1.28

Certain gains & charges (see Additional Financial Information
section)

(0.13)

(0.16)

(0.56)

0.10

Net income (loss) per common share - continuing operations

2.39

0.59

2.08

1.38

Discontinued operations:

0.05

—

0.08

(0.01)

Net income (loss) per common share - diluted

$

2.44

$

0.59

$

2.16

$

1.37

Three Months Ended
September 30, 2018

Nine Months Ended
September 30, 2018

Severance
and
Employee
Benefit Costs

Other Costs

Total Costs

Severance
and
Employee
Benefit Costs

Other Costs

Total Costs

Global Competitiveness Program:

     Agribusiness

$

1

$

4

$

5

$

8

$

16

$

24

     Edible Oil Products

—

1

1

2

4

6

     Milling Products

—

—

—

—

2

2

     Sugar & Bioenergy

—

1

1

2

4

6

     Fertilizer

—

—

—

—

1

1

Costs included in Selling, general
and administrative expenses

1

6

7

$

12

$

27

$

39

Other associated cost reduction and
strategic initiatives:

     Costs included in Cost of goods sold

2

—

2

$

8

$

—

$

8

Total GCP and Other costs

$

3

$

6

$

9

$

20

$

27

$

47

(1) Agribusiness:

2018 third quarter EBIT includes charges related to the GCP of $(5) million [$(1) million for severance and other employee benefit costs and $(4) million for other program costs], all of which was included in Selling, general and administrative expenses (SG&A).   2018 third quarter EBIT also includes $(2) million for severance and other employee benefit costs related to other industrial initiatives recorded in Cost of goods sold (COGS), and a $(14) million loss on the sale of an equity investment.

EBIT for the nine months ended September 30, 2018 includes charges related to the GCP of $(24) million [$(8) million for severance and other employee benefit costs and $(16) million for other program costs], all of which was included in SG&A.   EBIT for the nine months ended September 30, 2018 also includes $(6) million for severance and other employee benefit costs related to other industrial initiatives recorded in COGS and a net $(13) million loss on sales of an equity investment and a subsidiary.

2017 EBIT for the three and nine months ended September 30, includes charges related to the GCP of $(7) million [$(4) million for severance and other employee benefit costs and $(3) million for other program costs], all of which was included in SG&A.  2017 EBIT also includes $(17) million of impairment charges [$(13) million for our palm oil plantation joint venture and $(4) million for impairment of intangible assets related to patents.]  Of these amounts, $(4) million was included in SG&A.

(2) Edible Oil Products:

2018 third quarter EBIT includes charges related to the GCP of $(1) million for other program costs, all of which was included in Selling, general and administrative expenses (SG&A).   Additionally, $(1) million of acquisition and integration costs related to the acquisition of IOI Loders Croklaan were incurred recorded within SG&A.

EBIT for the nine months ended September 30, 2018 includes charges related to the GCP of $(6) million [$(2) million for severance and other employee benefit costs and $(4) million for other program costs], all of which was included in SG&A.  Additionally, $(11) million of acquisition and integration costs related to the acquisition of IOI Loders Croklaan were incurred, all of which were included within SG&A.

2017 EBIT for the three and nine months ended September 30, includes charges related to the GCP of $(2) million for other program costs, all of which was included in SG&A. 2017 EBIT also includes $(1) million for severance and other employee benefit costs related to other industrial initiatives recorded in COGS, as well as $(1) million of impairment charges on intangible assets related to patents, which is included in SG&A.

(3) Milling Products:

EBIT for the nine months ended September 30, 2018 includes charges related to the GCP of $(2) million for other program costs, all of which was included in SG&A.   EBIT for the nine months ended September 30, 2018 also includes $(1) million for severance and other employee benefit costs related to other industrial initiatives recorded in COGS.

2017 EBIT for the three and nine months ended September 30, includes charges related to the GCP of $(1) million for severance and other employee benefit costs, which was included in SG&A. 2017 EBIT also includes $(1) million for severance and other employee benefit costs related to other industrial initiatives recorded in COGS, as well as $(1) million of impairment charges on intangible assets related to patents, which is included in SG&A.

(4) Sugar & Bioenergy:

2018 third quarter EBIT includes charges related to the GCP of $(1) million for other program costs, all of which was included in SG&A.  2018 third quarter EBIT also includes Sugar restructuring charges of $(2) million recorded in COGS.

EBIT for the nine months ended September 30, 2018 includes charges related to the GCP of $(6) million [$(2) million for severance and other employee benefit costs and $(4) million for other program costs], all of which was included in SG&A.  EBIT for the nine months ended September 30, 2018 also includes Sugar restructuring charges of $(8) million recorded in COGS and a loss of $(16) million on the sale of an equity investment in Brazil, recorded in Other income (expense) - net.

2017 EBIT for the three and nine months ended September 30, includes charges related to the GCP of $(1) million for other program costs, all of which was included in SG&A. 2017 EBIT also includes $(1) million of impairment charges on intangible assets related to patents, which is included in SG&A.

2017 charges also include Sugar restructuring charges of which $(4) million and $(16) million, that were recorded in the three and nine months ended September 30, 2017, respectively.   Of these amounts, $(0) million and $(1) million, were included within SG&A during the three and nine months ended September 30, 2017, respectively. Additionally, EBIT for the three and nine months ended September 30, 2017 includes gains of $8 million related to indirect tax credits, none of which was included within SG&A.

(5) Fertilizer:

EBIT for the nine months ended September 30, 2018 includes charges related to the GCP of $(1) million for other program costs, all of which was included in SG&A.  EBIT for the nine months ended September 30, 2018 also includes $(2) million for severance and other employee benefit costs related to other industrial initiatives recorded in COGS.

(6) Income Taxes and Other Unallocated: 

2018 EBIT for the three and nine months ended September 30, includes a loss on the extinguishment of debt of $12 million.

In the three and nine months ended September 30, 2018, income tax benefits (charges) includes total benefits of $15 million for the favorable resolution of uncertain tax positions in North America.

In the nine months ended September 30, 2017, income tax benefits (charges) includes total benefits of $49 million, $32 million for the favorable resolution of uncertain tax positions in Asia and a $17 million as a result of a tax election in South America.

Notes to Financial Tables:

(7)  See Definition and Reconciliation of Non-GAAP Measures.

(8) A reconciliation of Net income (loss) attributable to Bunge to Net income (loss) is as follows:

Nine Months Ended
September 30,

2018

2017

Net income (loss) attributable to Bunge

$

332

$

220

EBIT attributable to noncontrolling interest

16

10

Noncontrolling interest share of interest and tax

(3)

(3)

Net income (loss)

$

345

$

227

(9)

Approximately 5 million and 4 million outstanding stock options and contingently issuable restricted stock units were not dilutive and not included in the weighted-average number of common shares outstanding for the three and nine months ended September 30, 2018, respectively.  Additionally, approximately 8 million weighted-average common shares that are issuable upon conversion of the convertible preference shares were not dilutive and not included in the weighted-average number of shares outstanding for the nine months ended September 30, 2018.

Approximately 3 million outstanding stock options and contingently issuable restricted stock units were not dilutive and not included in the weighted-average number of common shares outstanding for the three and nine months ended September 30, 2017.  Additionally, approximately 8 million weighted-average common shares that are issuable upon conversion of the convertible preference shares were not dilutive and not included in the weighted-average number of shares outstanding for the three and nine months ended September 30, 2017.

(10)

Includes readily marketable inventories of $5,706 million and $4,056 million at September 30, 2018 and December 31, 2017, respectively. Of these amounts, $4,533 million and $2,767 million, respectively, can be attributable to merchandising activities.

(11)

In accordance with new cash flow presentation requirements under U.S. Generally Accepted Accounting Principles, cash receipts from payments on beneficial interests in securitized trade receivables should be classified as cash inflows from investing activities. As such, we have made necessary changes to our cash flow presentation in current and prior periods presented, which resulted in an increase in cash inflows from investing activities and a corresponding decrease to cash from operating activities.

(12)

The Oilseed business included in our Agribusiness segment consists of our global activities related to the crushing of oilseeds (including soybeans, canola, rapeseed and sunflower seed) into protein meals and vegetable oils; the trading and distribution of oilseeds and oilseed products; and biodiesel production, which is primarily conducted through joint ventures.

The Grains business included in our Agribusiness segment consists primarily of our global grain origination activities, which principally conduct the purchasing, cleaning, drying, storing and handling of corn, wheat, barley, rice and oilseeds at our network of grain elevators; the logistical services for distribution of these commodities to our customer markets through our port terminals and transportation assets (including trucks, railcars, barges and ocean vessels); and financial services and activities for customers from whom we purchase commodities and other third parties.