Bunge Q2 earnings triple as Americas oilseed sector ramps up

31 Jul 2019 | Thomas Hughes

US-based agribusiness major Bunge more than tripled its profits in the second quarter after closing its loss-making sugar trading and distribution services, streamlining its logistics in South America and benefiting from stronger edible oils demand in key North and South American markets, the company said in an earnings report.

Additionally, the company also gained $135 million as its stake in plant-based meat substitute producer Beyond Meat surged in value, while its sugar and bio-energy joint venture project in Brazil with BP is set to create the second-largest ethanol producer in the country, the company said in a conference call to investors.

Full segment earnings in the April to June period before interest and tax (EBIT) came in at $370 million, more than three times the $117 million recorded in the same quarter last year.

The results were in line with market expectations.

In the company’s oilseeds sector, earnings totalled $189 million, an increase of $71 million year-on-year because of higher crush margins in South America alongside stronger North American demand.

But results in Asia and Europe were largely flat year-on-year and while the “soybean crush was helped by higher volumes (it) was also impacted by lower structural margins this year,” Chief Financial Officer John Neppl told investors.

For grains, despite bottlenecks in the firm's North American operations amid adverse weather, South American operations lifted profitability, moving to a $25 million gain versus a $22 million loss in the same quarter last year.

But further gains were stymied by the wet weather conditions in April and May, including delays to loading barges in the Mississippi and farmers holding on to soybeans in the hope of realising higher prices.

“We estimate that $13 million was lost in the quarter due to bad weather,” Neppl added.