Beyond Meat stake boosts Bunge’s second-quarter results

02 Aug 2019 --- Bunge’s second-quarter profits have been boosted by its investment in plant-based burger maker Beyond Meat. The grain and oilseed giant’s results include US$135 million net unrealized gain on Bunge Ventures’ stake in the pioneering meat substitutes producer. The Q2 results were in line with company expectations, however, during a conference call, Bunge CEO Greg Heckman warned that African swine fever (ASF) continues to impact Chinese demand for soy meal, and combined with the unresolved US-China trade situation, this has altered both typical trade flows and producer marketing patterns.

Heckman provided a high-level review of developments and results in the quarter, progress against Bunge’s strategic priorities and the outlook for the year. 

“We haven’t discussed ventures often, but it’s an important vehicle as the competitive landscape in consumer preferences drive change and as technology continues to accelerate innovation and transparency in our industry,” he said.

“The second quarter 2019 results benefited from timing differences and the contribution from a venture investment. Core business results were generally in line with our outlook. Soy crush was held by higher volumes, but also impacted by lower structural margins this year,” he said. “In grains, our South American results were higher while our North American team managed through extreme weather conditions, which impacted both our operations and farmer marketing patterns.”

Heckman explained that results in Edible Oils were better in North America and South America and essentially flat in Europe and Asia. Sugar and Bio Energy benefited from lower costs and better ethanol volumes and prices while fertilizer results also improved in the quarter, he noted. 

The agribusiness benefited from approximately US$70 million in timing differences in soy crush, along with increased soy crush volumes, partly offset by lower structural margins.

“I continue to feel very good about focus and the progress on our key priorities including strengthening financial discipline and risk management and our ability to optimize the performance of our physical flows. As we work toward a new operating global model, we’re seeing an engaged and energized team, improved speed of execution and risk management that better supports our commercial decision making,” he added.

Heckman also detailed the company’s agreement with BP to continue the Sugar and Bioenergy business to a new 50/50 Joint Venture in Brazil. “We will receive US$75 million in cash at closing and will transfer US$700 million in debt to the JV on a non-recourse basis. With this JV, we will own 50 percent of an entity that will be number two in Brazil by actual crush volume and operating with a conservative capital structure,” he said.

“We’re very excited about this transaction. It meets all of our strategic criteria and enables us to reduce leverage.”

Bunge expects closing before the end of the year, subject to regulatory approvals. 

The company’s view on full-year consolidated results has not changed since February.

By Gaynor Selby