Bunge Reports Second Quarter 2015 Results
07/30/15
- Total adjusted segment EBIT of
$152 million , down$266 million vs. last year - Agribusiness lower due to weak softseed processing and trading & distribution results
- Food & Ingredients impacted by market slowdown in
Brazil - YTD total adjusted segment EBIT of
$525 million , up$32 million vs. last year - Combined Agri-Foods rolling 4Q ROIC of 9.6%; 2.6 points over WACC
- Expect strong 2H in Agribusiness, improvement from 1H in Foods and combined full year Agri-Foods ROIC of ~10%
Financial Highlights
Quarter Ended | Six Months Ended | |||
US$ in millions, except per share | 6/30/15 | 6/30/14 | 6/30/15 | 6/30/14 |
Net sales | ||||
Total segment EBIT (a) | ||||
Certain gains & (charges) (b) | - | - | ||
Total segment EBIT, adjusted (a) | ||||
Agribusiness (c) | ||||
Oilseeds | ||||
Grains | ||||
Food & Ingredients (d) | ||||
Sugar & Bioenergy | ||||
Fertilizer | ||||
Net income (loss) per common share from | ||||
Net income (loss) per common share from |
(a) | Total segment earnings before interest and tax ("EBIT"); net income (loss) per common share from continuing operations-diluted; and net income (loss) per common share from continuing operations-diluted, adjusted 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) | Includes certain gains and charges included in segment EBIT. See Additional Financial Information for detail. |
(c) | See footnote 8 of Additional Financial Information for a description of the Oilseeds and Grains businesses in Bunge's Agribusiness segment. |
(d) | Includes Edible Oil Products and Milling Products segments. |
Overview
Soren Schroder, Bunge's Chief Executive Officer, stated, "Conditions in the second quarter were more challenging than expected. In Agribusiness, we experienced weak softseed margins, slow farmer selling outside of
"Looking ahead to the second half of the year, we expect full-year Agribusiness EBIT to exceed
"We also continue to make strides in driving greater efficiency through our performance improvement initiatives, having generated approximately
Second Quarter Results
Agribusiness
Significantly lower results in softseed processing and trading & distribution were the primary drivers of lower performance in the quarter. Soy processing results were comparable with last year.
In Oilseeds, Canadian canola processing margins were significantly weaker than an exceptionally strong prior-year period. European softseed margins were down from last year driven by the combination of slow farmer selling and decreased vegetable oil demand.
In soy processing, results were higher in
In Grains, results in grain origination were slightly lower as improved performance in
Edible Oil Products
Lower results in the quarter were primarily due to market challenges in our Brazilian operation, which experienced a significant decrease in margins and lower volumes as consumers reduced spending and traded down to lower value products in response to the recessionary economy. Results in our European operation were also down in the quarter largely due to the weak economic environment in certain countries, which more than offset the savings from our performance improvement initiatives. In the U.S., excluding a
Milling Products
The decrease in performance in the quarter was primarily due to lower results in our Brazilian wheat and U.S. corn milling operations. In
Sugar & Bioenergy
The second quarter is typically a weak period for sugarcane milling operations as it marks the beginning of the harvest in the Center-South of
Sugarcane milling results were slightly lower than breakeven and last year, as higher sugar prices in Brazilian reais were offset by lower domestic ethanol and cogen prices. Trading & distribution performance was down slightly from last year, and results in our biofuel joint ventures were lower due to the less favorable U.S. ethanol production environment. Results in the quarter were impacted by a
Fertilizer
Higher results in our Argentine fertilizer business were more than offset by lower results in our Brazilian port operation, which was impacted by lower volume and currency translation.
Cash Flow
Cash used by operations in the six months ended June 30, 2015 was
Income Taxes
Excluding approximately
Outlook
Drew Burke, Chief Financial Officer, stated, "We expect a strong second half in Agribusiness with full year segment results exceeding
"In Grains, the Brazilian safrinha corn harvest is underway and with the recent devaluation of the Brazilian real, farmer selling has picked up for both corn and soybeans. Farmers in the U.S. and Black Sea have planted large crops, and based on current growing conditions should provide ample supplies to drive high asset utilizations. While global grain supply and demand should be in relative balance, the reduced production in certain Northern Hemisphere regions could provide pockets of supply dislocation opportunities.
"In Food & Ingredients, we expect improvement from first half levels. In Europe, margins should improve as new oilseed crops reset raw material costs. In the U.S., we will continue to leverage the benefits from our performance improvement programs, and in
"In Sugar & Bioenergy, our sugarcane crop continues to develop well with favorable weather. Based on current strong domestic demand for ethanol in
Conference Call and Webcast Details
Bunge Limited's management will host a conference call at 10:00 a.m. EDT on July 30, 2015 to discuss the company's results.
Additionally, a slide presentation to accompany the discussion of results will be posted on www.bunge.com.
To listen to the call, please dial (866) 436-9172. If you are located outside
To access the webcast, go to "Webcasts and Events" in the "Investors" section of the company's website. Select "Q2 2015 Bunge Limited Conference Call" and follow the prompts. Please go to the website at least 15 minutes prior to the call to register and download any necessary audio software.
A replay of the call will be available later in the day on July 30, 2015, continuing through August 29, 2015. To listen to it, please dial (888) 843-7419 or, if located outside
About Bunge Limited
Bunge Limited (www.bunge.com, NYSE: BG) is a leading global agribusiness and food company operating in over 40 countries with approximately 35,000 employees. Bunge buys, sells, stores and transports oilseeds and grains to serve customers worldwide; processes oilseeds to make protein meal for animal feed and edible oil products for commercial customers and consumers; produces sugar and ethanol from sugarcane; mills wheat, corn and rice to make ingredients used by food companies; and sells fertilizer in South America. Founded in 1818, the company is headquartered in
Cautionary Statement Concerning Forward-Looking Statements
This press release contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including "may," "will," "should," "could," "expect," "anticipate," "believe," "plan," "intend," "estimate," "continue" and similar expressions. These forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. The following important factors, among others, could affect our business and financial performance: industry conditions, including fluctuations in supply, demand and prices for agricultural commodities and other raw materials and products used in our business; fluctuations in energy and freight costs and competitive developments in our industries; the effects of weather conditions and the outbreak of crop and animal disease on our business; global and regional agricultural, economic, financial and commodities market, political, social and health conditions; the outcome of pending regulatory and legal proceedings; our ability to complete, integrate and benefit from acquisitions, dispositions, joint ventures and strategic alliances; our ability to achieve the efficiencies, savings and other benefits anticipated from our cost reduction, margin improvement and other business optimization initiatives; changes in government policies, laws and regulations affecting our business, including agricultural and trade policies, tax regulations and biofuels legislation; and other factors affecting our business generally. The forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
Additional Financial Information
The following table provides a summary of certain gains and charges that may be of interest to investors. The table includes a description of these items and their effect on continuing operations for total segment EBIT, net income (loss) attributable to Bunge and earnings per share for the quarters ended June 30, 2015 and 2014.
Net Income (loss) | Earnings | ||||||||||||
Total Segment | Attributable to | Per Share | |||||||||||
(In millions, except per share data) | EBIT | Bunge | Diluted | ||||||||||
Quarter Ended June 30: | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||
Continuing operations: | |||||||||||||
Agribusiness: | |||||||||||||
Reversal of export tax contingency (1) | $ | 30 | $ | - | $ | 19 | $ | - | $ | 0.13 | $ | - | |
Edible Oil Products: | |||||||||||||
Impairment of packaged oil facility (2) |