February 13, 2020
Bunge reports strong quarterly profits in its agribusiness segment
The agricultural commodities trader reported higher than expected quarterly profits thanks to rising crop process in South America and higher margins in the company's agribusiness sector, reported Reuters.
But the company's 2020 earnings per share remained flat with uncertainty over the global trade and demand for Bunge's livestock feed and food products.
Bunge said agribusiness results may fall in 2020 with margins changing because of crop sizes, farmer sales and the US-China trade deal being enforced.
A crop supply glut and the US-China trade war has affected Bunge and other agribusiness companies such as Arche Daniels Midland, Cargill and Louis Dreyfus.
Livestock feed demand for the ABCDs have been disrupted by African swine fever (ASF) in China, with looming doubt over the recent coronavirus outbreak on the companies' business.
Gregory Heckman, Bunge chief executive officer expects markets to stay volatile due to ASF and trade between the United States and China.
He added that it is too early to know if the coronavirus or the Argentinian agricultural export tax policy will impact markets.
Bunge's agribusiness sector reported gains in the fourth quarter thanks to high demand for vegetable oil and good margins on South American oilseed crushing. The segment is the company's biggest in revenues and volumes.
The company's grains unit also reported positive adjusted earnings before interest and tax (EBIT) margins because of accelerated farmer crop sales in Argentina on the expectation of export tax increases. EBIT adjusted for agribusiness is three times higher to US$177 million in the fourth quarter.
Bunge's net sales dropped to US$10.78 billion in the fourth quarter, which ended December 31, 2019. This fell from US$11.54 billion in the same period the year prior.
The company's adjusted net income hit US$191 million, higher than the US$18 million in 2018.
Bunge shares are up 3% higher in pre-market trading. According to IBES data from Refinitiv, Bunge earned US$1.27 per share, higher than the 32 cents per share average estimated by analysts.