Bunge: Reports Third Quarter 2019 Results

White Plains / NY. (bl) Bunge Limited, a leader in agriculture, food and ingredients, reported its financial results for the quarter ended September 30 (Q3/2019).

Q3 GAAP EPS of USD (10.57) vs. USD 2.39 in the prior year; USD 1.41 vs. USD 2.52 on an adjusted basis
Results included approximately USD 1.7 billion of charges related to portfolio initiatives, primarily the formation of the joint venture for the Brazilian Sugar + Bioenergy business
Agribusiness managed challenging markets well and benefited from approximately USD 25 million of net mark-to-market gains, which included USD 95 million of new gains on forward soy crush margin contraction
Food + Ingredients performed well, driven by strength in Edible Oils
Progress continues on streamlining global business structure

Chief Executive Greg Heckman: «We navigated uncertain and deteriorating market conditions well. While we expect headwinds to continue, we are making progress on our key priorities. We have improved our operational execution, as well as our discipline around risk management. Our decision to combine our global and North American headquarters in St. Louis is an important step in the work underway to streamline our global business structure. We will continue to focus on the business drivers within our control as we execute our mission of delivering results and driving increased returns to shareholders.»

Financial Highlights

USD in millions, except per share data	Q3-2019		Q3-2018		9M-2019		9M-2018
Net income (loss) attributable to Bunge	USD	(1,488)	USD	365	USD	(1,229)	USD	332
.
Net income (loss) per common share from continuing operations-diluted	USD	(10.57)	USD	2.39	USD	(8.87)	USD	2.08
.
Net income (loss) per common share from continuing operations-diluted, adjusted (a)	USD	1.41	USD	2.52	USD	3.32	USD	2.64
.
Total Segment Ebit (a)	USD	(1,440)	USD	535	USD	(935)	USD	667
Certain (gains) + charges (b)	1,744		38		1,775		108
Total Segment Ebit, adjusted (a)	USD	304	USD	573	USD	840	USD	775
Agribusiness (c)	USD	153	USD	485	USD	462	USD	655
Oilseeds	USD	107	USD	367	USD	369	USD	473
Grains	USD	46	USD	118	USD	93	USD	182
Food + Ingredients (d)	USD	86	USD	62	USD	203	USD	162
Sugar + Bioenergy	USD	53	USD	3	USD	21	USD	(57)
Fertilizer	USD	22	USD	23	USD	29	USD	15
Other (e)	USD	(10)	USD	–	USD	125	USD	–

(a) Total Segment earnings before interest and tax («Total Segment Ebit»); Total Segment Ebit, adjusted; Net income (loss) per common share from continuing operations-diluted, adjusted; Adjusted funds from operations and ROIC are non-GAAP financial measures.
(b) Certain gains + (charges) included in Total Segment Ebit. See Additional Financial Information for detail.
(c) See footnote 12 for a description of the Oilseeds and Grains businesses in Bunge’s Agribusiness segment.
(d) Includes Edible Oil Products and Milling Products segments.
(e) Represents amounts attributable to corporate and other items not allocated to the reportable segments.

Third Quarter Results

Agribusiness

In Oilseeds, soy crush margins were lower globally driven by the combination of farmer retention of soybeans in anticipation of higher prices and soft export demand for soymeal. Results were negatively impacted by approximately USD 70 million of mark-to-market reversals on soy crushing contracts, which favorably impacted Q2. However, a decrease in forward soy crush margins during the third quarter resulted in new mark-to-market gains of approximately USD 95 million, benefiting our results. As we execute on these contracts, mainly in the fourth quarter, we expect these gains to reverse. Softseed processing results were higher than last year, as were results in trading + distribution.

In Grains, origination results were lower in North and South America primarily due to soft export demand, farmer retention related to the U.S.-China trade dispute and the delayed harvest in the U.S. Results in ocean freight and trading + distribution were lower than last year.

Edible Oil Products

Improved performance was largely driven by higher results in North America and Brazil, which benefited from better supply-demand balance of soy oil, as well as improved execution. Bunge Loders Croklaan also contributed to the increased results.

Milling

The decline in segment performance was primarily driven by lower margins in the U.S. and lower volumes and margins in Mexico. Results in Brazil were comparable to last year.

Sugar + Bioenergy

Higher sugarcane milling results were primarily driven by USD 32 million of lower depreciation due to the Brazilian sugarcane milling business being classified as held for sale, increased cane crush volumes and higher ethanol prices.

Fertilizer

Slightly lower results were in line with the prior year.

Cash Flow

Cash used by operations in the nine months ended September 30, 2019 was approximately USD 1.3 billion compared to cash used of approximately USD 3.3 billion in the same period last year. The year-over-year variance was primarily due to a smaller inventory build this year. Trailing four-quarter adjusted funds from operations was approximately USD 1.0 billion as of the quarter ended September 30, 2019.

Income Taxes

Income taxes for the nine months ended September 30, 2019 were USD 70 million, which included notable tax benefits of USD 30 million. The prior year included a USD 15 million notable tax benefit.

Outlook

Based on the current agribusiness environment, which has become more challenging, the Company now expects a decline in earnings versus 2018. This outlook excludes notable items, the favorable impact of Bunge Ventures’ investment in Beyond Meat and higher results in Sugar + Bioenergy.

Additionally, the Company expects the following for 2019: A tax rate in the range of 20 percent to 24 percent excluding notable items; net interest expense in the range of USD 290 to USD 300 million; capital expenditures in the range of USD 520 to USD 540 million, of which approximately USD 115 million is related to sugarcane milling; and depreciation, depletion and amortization of approximately USD 550 million.