Bunge lowers '08 earnings

Bunge Ltd. said on Tuesday (Jan 13) that it is lowering its full-year '08 earnings estimate in light of challenging economic conditions.

 

The US-based Bunge cited lower global demand for soy products, credit constraints in Brazil and limited fertiliser sales as contributing to its gloomier forecast.

 

The company also said that it incurred a foreign exchange loss of about US$225 million due to the devaluation of the Brazilian currency.

 

Bunge lowered its earnings expectations for the full year to US$1.06 billion or US$7.70 a share, down from its earlier estimate of US$11.60 to US$11.90 a share.

 

Over the past two years, Bunge earned record profits amid volatile grain and energy markets, but global economic slowdown contributed to weaker agriculture exports and steep declines in grain prices causing a cooling in the agriculture markets.

 

Bunge's stock is down more than 60 percent from its 52-week high of US$135.

 

Bunge's chief financial officer, Jacqualyn Fouse said demand fell more than anticipated in the fourth quarter.

 

The company also noted that depressed economic conditions and significant declines in agricultural commodity, freight and energy prices have adversely affected certain customers and counterparties.

 

Bunge said that farmers have been reluctant to sell their crops amid the economic uncertainty as they have enjoyed high grain prices, but are now faced with higher costs for everything from seed to fertiliser, in turn lessening crop volume available for Bunge to process and ship.

 

Bunge added that these periods of soft demand are typically short lived in the industry, and is expecting to see improvements during 2009.