Profits up at Bunge Amid Tough Trading Conditions
12 Feb 2016 --- Bunge has reported profits of $203m in the quarter, an improvement on the $54m loss a year before, as it looked to navigate a collapse in commodity prices and difficult trading conditions.
Sales nudged down from $13.2bn to $11.1bn in the quarter ending December 31 but the results surpassed analyst expectations.
The agribusiness and food giant said its Brazilian business continued to struggle while a slowdown in sales of US grain exports is a further concern.
Soren Schroder, Bunge’s chief executive said the company had hit $100m of savings from its improvement initiatives, as the company looks to cuts costs across its food business.
Schroder said: “In the fourth quarter, Bunge managed the challenging market conditions well, leveraging our balanced global footprint to capitalize on good soy processing margins and increased South American grain exports.”
“Food & Ingredients showed slight improvement from the third quarter; however, our Brazilian food businesses continued to struggle in the depressed market environment. Our sugarcane milling operation had its strongest quarter of the year, finishing 2015 with positive EBIT and free cash flow.
Schroder said there were positive signs for the year ahead.
He added: “Global demand for our core Agribusiness products continues to grow with an increasing percentage of this growth being supplied by South America, which plays into the strength of our footprint. Brazil is expected to grow large soy and corn crops supporting good crush and export margins, and improved farmer selling in Argentina will allow us to operate our crushing and port assets at higher utilizations.”
“Our food business will continue to grow, benefitting from leaner operations, more focused, consumer-driven innovation and tighter working relationships with key customers. Brazilian ethanol and global sugar prices have both improved.”
“These improvements, coupled with stronger agricultural efficiency and lower costs, give us confidence we will experience a solid year in sugarcane milling.”
“But challenges are also evident. Conditions will remain difficult for our Brazilian Food & Ingredients businesses. Northern Hemisphere oilseed processing margins and grain exports will be pressured until markets adjust to the increased level of global supplies.”
