Bunge Q3 earnings plunge 47% despite strong edible oils growth

Agribusiness giant Bunge saw its earnings crash 47% in the third quarter as a poor performance from the grains and oilseeds sector pegged back robust growth in their edible oil sector, according to earnings results. 

The US-based business, the B in the ABCD quartet of agri-majors, reported full segment earnings in the July-to-September period at $304 million, before income and tax (EBIT).

This is down sharply on the $573 million mt reported in the same quarter last year.

The figures are also $66 million below the second quarter's figures, as poor earnings from the company’s core oilseeds and grains sectors produced a total of $153 million EBIT in the third quarter. 

This is down sharply from the $485 million reported in the same period last year.

“Average global soy crush margins were significantly lower than in 2018, driven by a combination of farmer retention of soybeans in anticipation of higher prices and soft export demand for soymeal,” Bunge’s chief executive Greg Heckman said during a earnings call on Thursday.

That loss offset unrealised mark-to-market gains of $95 million on contracting forward soy crush margins.

Earnings in the oilseeds segment totalled $107 million, nearly 71% lower than the $367 million recorded in the same quarter last year.

The same dynamic marked the North and South American grains market, with farmers retaining stocks as a hedge against the US-China trade dispute and the delayed harvest in the US.

Grain sector earnings more than halved, falling to $46 million from $118 million in the same period last year.

Nonetheless, strong performances in the edible oil segment meant that the results actually exceeded analyst expectations.

A slower soybean crush, particularly in Brazil, tightened soyoil output and supported edible oils’ quarterly earnings to propel them to $52 million mt, up 73% year-on-year.

The quarter was also marked by the move of its headquarters to St Louis, Missouri from White Plains, New York in addition to job losses in its Geneva operations, as reported by Agricensus in September, as part of a strategic restructuring of the company.