Bunge forecasts strong earnings growth for 2018


Bunge, the international agricultural trader, forecast strong earnings growth for 2018 thanks to strong soyabean processing margins and trading profits in grains, echoing comments from rival Archer Daniels Midland a day before.

The company, which posted a larger than expected first quarter loss of 21 cents a share compared to analyst forecasts of a 18 cents loss, said the environment had improved significantly.

“During the first quarter, we saw a dramatic change in the global soy crush market environment as margins expanded significantly from 2017 levels,” said Soren Schroder, chief executive.

The company expects to see strong earnings growth for 2018, particularly in its agribusiness unit, which includes grain trading and soyabean processing. It said the full-year earnings before interest and tax of the agribusiness operations is expected to come in between $800m to $1bn, thanks to soyabean crush margins.

The increase in margins resulted in negative mark-to-market of $120m related to forward oilseed crushing contracts, which impacted first quarter earnings but would be reversed later in the year.

Argentina’s worst drought in five decades hit output of soyabeans, which are crushed to make feed for livestock. Argentina is the world’s top exporter of soyabean meal, and prices for the commodity jumped, leading to higher processing margins in the Americas.

In contrast to the grains and oilseeds performance, Bunge’s sugar and bioenergy business remained weak, with losses before interest and tax up 40 per cent from a year earlier to $24m. The company reduced its full year outlook range with results expected to be seasonally weak until the second half of the year.

The company said it was “progressing towards the separation of our sugarcane milling business” and recently signed a share purchase agreement to sell its interest in our renewable oils joint venture, and was in the process of exiting the global sugar trading operation.

The Financial Times

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