Bunge Reports Third Quarter 2017 Results
11/01/17
- Q3 GAAP EPS of
$0.59 vs.$0.79 last year,$0.75 vs$0.73 on an adjusted basis - Agribusiness improved sequentially and year-over-year, despite a challenging environment
- Edible Oils had a solid quarter driven by higher volumes and margins in most regions
- Sugar & Bioenergy impacted by lower than expected Brazilian ethanol prices
- Competitiveness Program progressing on track; industrial savings on plan
- Announced Loders acquisition, significantly accelerating growth of value-added Oils
- Expect sequential improvement in Q4 that continues into 2018
- Financial Highlights
Quarter Ended | Nine Months Ended | |||||||||||||
US$ in millions, except per share data | 9/30/2017 | 9/30/2016 | 9/30/2017 | 9/30/2016 | ||||||||||
Net income (loss) attributable to Bunge | $ | 92 | $ | 118 | $ | 220 | $ | 474 | ||||||
Net income (loss) per common share from continuing | $ | 0.59 | $ | 0.79 | $ | 1.38 | $ | 3.24 | ||||||
Net income (loss) per common share from continuing | $ | 0.75 | $ | 0.73 | $ | 1.28 | $ | 2.98 | ||||||
Total Segment EBIT (a) | $ | 175 | $ | 213 | $ | 381 | $ | 740 | ||||||
Certain gains & (charges) (b) | $ | (29) | $ | 14 | $ | (41) | $ | 2 | ||||||
Total Segment EBIT, adjusted (a) | $ | 204 | $ | 199 | $ | 422 | $ | 738 | ||||||
Agribusiness (c) | $ | 127 | $ | 83 | $ | 254 | $ | 545 | ||||||
Oilseeds | $ | 88 | $ | 79 | $ | 182 | $ | 273 | ||||||
Grains | $ | 39 | $ | 4 | $ | 72 | $ | 272 | ||||||
Food & Ingredients (d) | $ | 64 | $ | 72 | $ | 153 | $ | 159 | ||||||
Sugar & Bioenergy | $ | 8 | $ | 35 | $ | 11 | $ | 21 | ||||||
Fertilizer | $ | 5 | $ | 9 | $ | 4 | $ | 13 |
(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 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 10 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, commented, "Our earnings improved sequentially and year-over-year, although they continued to be impacted by market and industry headwinds. As a result, we are reducing our earnings guidance for the year in Agribusiness and Sugar & Bioenergy. At the same time, we are making good progress towards our strategic objectives of creating a more balanced business, managing those aspects of our operations that we can control and taking proactive steps to ensure we remain agile in responding to changing market conditions."
He continued: "Consistent with our strategy, in September we announced the acquisition of Loders Croklaan, which is expected to close in the first half of next year. This transaction will accelerate our growth in higher margin value-added products and it gives us an unmatched global footprint with best-in-class innovation capabilities. In addition, I am pleased with our progress to date in reducing costs and increasing efficiencies. In the quarter we achieved
He added, "Looking ahead, there are some bright spots in the market. Global soy crush margins are off their lows as utilization rates have been adjusting to balance the oversupply of meal, and we have entered the Northern Hemisphere crop season where
- Third Quarter Results
Agribusiness
While both Grains and Oilseeds results were higher than last year, overall margins remained weak, reflecting excess global supplies, spot global customers and pressure on farmer margins.
In Grains, higher origination results were driven by improvements in
In Oilseeds, overall global structural crush margins were compressed during the quarter, reflecting farmer retention and excess meal supply. Compared to last year, soy processing results improved, driven by higher results in the
Edible Oil Products
Results improved in most regions, driven by higher margins and lower costs. In
Milling Products
The decline in segment results was due to our Brazilian business, where volumes and margins were negatively impacted by consumers trading down on value and where the small bakery channel continued to suffer a year-over-year reduction in demand. Also impacting results in
Sugar & Bioenergy
Results were lower in sugarcane milling, primarily due to lower ethanol prices and higher industrial costs, which more than offset higher sucrose content in the cane. While Brazilian ethanol prices increased in the quarter, they remained below levels seen last year. We remain committed to reducing exposure to sugarcane milling and are in the final stages of completing its financial separation. We continue to explore all options to maximize shareholder value, while improving operations through cost and productivity initiatives. The business is performing well despite the challenging price environment.
Trading & distribution results in the quarter were negative, driven by weak distribution margins and a lack of market volatility. As a result of the very competitive environment, we are in the process of restructuring the business. Results in the quarter were also impacted by a
Fertilizer
Despite lower costs, earnings decreased in the quarter due to lower margins in our Argentine fertilizer business as a result of structural challenges of our locally produced nitrogen products competing with lower-priced international imports.
Competitiveness Program
The Competitiveness Program was announced in July 2017. The program is expected to rationalize Bunge's cost structure and reengineer the way we operate, reducing overhead costs by approximately
The company is on track to meet or exceed its 2017 savings target of
Cash Flow
Cash used for operations in the nine months ended September 30, 2017 was
Income Taxes
Excluding approximately
- Outlook
Overall, we expect sequential earnings improvement in the fourth quarter, which will provide positive momentum as we enter 2018. Agribusiness should benefit with the shift to Northern Hemisphere harvests where the large
In Food & Ingredients, we continue to expect full-year 2017 EBIT of
Sugar & Bioenergy is expected to show strong sequential improvement as the fourth quarter is typically the strongest quarter, as Brazilian ethanol inventories normally tighten during this period. However, we are reducing our full-year EBIT range to
In Fertilizer, we continue to expect full-year 2017 EBIT of approximately
Expectations for the full-year 2017 tax rate, excluding notables, remains 18% to 22%, reflecting forecasted earnings mix.
Looking ahead to 2018, we will continue to focus on the factors in our business that can be controlled. Savings from the Competitiveness Program are expected to total
- Conference Call and Webcast Details
Bunge Limited's management will host a conference call at 8:00 a.m. EDT on Wednesday, November 1, 2017 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 (877) 883-0383. If you are located outside