Chicago — Agricultural commodities trader Bunge swung to a profit in the second quarter from a year-ago loss, helped by improved results at its South American operations.
Bunge also reported an unrealised gain from the company’s stake in Beyond Meat, meaning it could profit from the plant-based burger venture if it sells its shares in the future.
Though profits were tempered by weak export demand resulting from trade tensions between the US and China and harsh US spring weather, they topped Wall Street expectations and Bunge’s operations in Brazil and Argentina make it better placed than many rivals.
Shares rose 4.1% to $58.66, more than a seven-month high.
Trade war
Bunge left its previous earnings forecast unchanged, with results for its agribusiness segment, Bunge’s largest in terms of revenue, seen lower in 2019 amid uncertainty about late-planted US crops and the US-China trade war.
Bunge and its agribusiness peers Archer Daniels Midland, Cargill, and Louis Dreyfus have been cutting costs and restructuring operations as years of oversupplied grains markets dragged down prices and sapped trading opportunities for the companies, known as the ABCD quartet of grain traders.
Trade tensions and adverse US weather added further pressure. Grain merchants faced processing-plant down time, rail and barge shipping delays, and other supply uncertainty this spring as historic floods ravaged the central US.
The weather sliced about $13m from Bunge’s second-quarter profit, CFO John Neppl said.
Massive culling of hogs in China because of African swine fever is also “a major source of uncertainty” for the industry’s animal feed suppliers, CEO Greg Heckman said. “Combined with the unresolved US-China trade situation, this has altered both typical trade flows and producer marketing patterns,” he said on a conference call with analysts.
Heckman was appointed acting CEO in January, after a string of disappointing results, and took on the job permanently in April. The company also posted a first-quarter profit.
Net income available to the shareholders was $205m, or $1.43 per share, in the second quarter, compared with a loss of $21m, or 15c per share, a year earlier.
Adjusted earnings of 61c per share topped the average estimate for 34c a share, according to Refinitiv IBES data.
Profits in Bunge’s agribusiness unit were boosted by timing effects in soybean crushing operations of about $70m that it said will be reversed in the third quarter when soy products are sold.
Food and ingredients, as well as fertiliser earnings improved, while sugar and bio-energy posted a smaller loss than a year ago.
Reuters
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