Bunge Global (BG): A Diversified Agribusiness Navigating Shifting Market Dynamics

Published on September 24, 2024 | Ticker: BG

Bunge Global, a leading agribusiness and food company, has demonstrated its resilience in navigating the evolving market landscape. For the full year 2023, the company reported annual net income of $2,243 million and annual revenue of $59,532 million. Its annual operating cash flow reached $3,285 million, while free cash flow stood at $2,163 million.

Financials

In the first quarter of 2024, Bunge delivered solid results, with reported earnings per share of $1.68 compared to $4.15 in the prior-year period. Adjusted earnings per share were $3.04, down from $3.26 in the same quarter of 2023. Total segment earnings before interest and taxes (EBIT) was $584 million, an increase of $16 million compared to the prior-year quarter.

Business Overview

The company's core segments, Agribusiness, Refined and Specialty Oils, and Milling, continued to perform well, with Agribusiness segment EBIT increasing 53% year-over-year for the nine months ended September 30, 2023. Refined and Specialty Oils segment EBIT grew 30% during the same period, while Milling segment EBIT decreased 72% due to unfavorable mark-to-market results in South America.

Agribusiness Segment

Bunge's Agribusiness segment, which includes both processing and merchandising operations, saw mixed results in the first quarter. In processing, results were up slightly, driven by improved margins in Europe and Asia, partially offset by lower results in North and South America. Merchandising results were lower, primarily due to weaker performance in the global grains and oils value chains, where higher volumes were more than offset by lower margins.

Refined and Specialty Oils Segment

The Refined and Specialty Oils segment delivered a solid quarter, but results were down from the strong prior-year period. Higher results in Europe were more than offset by lower performance in North America and Asia, while South America remained in line with the previous year.

Milling Segment

In the Milling segment, higher results in South America, driven by improved margins and a more favorable origination market environment, were partially offset by lower volumes in North America following the sale of the Mexican wheat milling business in the third quarter of 2022.

Non-core Segments

Bunge's non-core Sugar & Bioenergy joint venture reported higher results, with increased sugar volumes and prices more than offsetting lower ethanol prices.

The company's Corporate and Other segment saw a decrease in EBIT, primarily due to higher expenses related to the announced acquisition of Viterra and other growth initiatives, as well as an impairment charge on a long-term investment.

Outlook

Looking ahead, Bunge is maintaining its full-year 2024 adjusted earnings per share guidance of approximately $9. The company expects Agribusiness results to be similar to the previous outlook and down from the prior year, primarily due to lower processing margins. Refined and Specialty Oils are expected to be in line with the previous outlook and down from the record prior year, reflecting a shift in the supply environment, particularly in the U.S. Milling results are anticipated to be up from the previous year, while Corporate and Other is expected to improve.

In the non-core segment, Bunge's Sugar & Bioenergy joint venture is expected to deliver results significantly down from the prior year, reflecting lower Brazil ethanol prices.

Recent Developments

Bunge's management remains confident in the company's ability to navigate the evolving market dynamics and capture opportunities to better serve the needs of both farmers and end consumers. The announced combination with Viterra is expected to further enhance Bunge's global platform and diversification, providing more optionality to address the world's food security needs.

The company's strategic investments, such as the expansion of its oilseed processing facility in Destrehan, Louisiana, and the commissioning of a new edible oil refinery in India, demonstrate Bunge's commitment to strengthening its capabilities and positioning itself for long-term growth.

Liquidity

Bunge's financial position remains robust, with a strong liquidity profile and a disciplined approach to capital allocation. As of the end of the first quarter of 2024, the company had committed credit facilities of approximately $8.7 billion, including $3 billion that will become available upon the close of the Viterra acquisition. Bunge's adjusted leverage ratio, which reflects its adjusted net debt to adjusted EBITDA, was 0.1x at the end of the quarter.

Conclusion

The company's focus on operational excellence, strategic investments, and prudent financial management has enabled it to navigate the evolving market landscape and position itself for continued success. Bunge's diversified business model, global reach, and commitment to innovation and sustainability make it a compelling player in the agribusiness and food industry.

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