April 29, 2022

 

Bunge raises 2022 earnings forecast on strong demand and tight supplies of essential crops

 

 

Bunge Ltd, a major global farm commodities merchant, has announced a higher quarterly adjusted profit and increased its full-year earnings forecast by 21% thanks to strong demand and tight supplies of essential crops since Russia invaded Ukraine, Reuters reported.

 

The conflict in Ukraine has worsened already scarce grain and oilseed supplies following weather-related crop losses in South America and other key production areas, increasing demand and improving Bunge's crop processing margins.

 

Bunge's results are similar to competitor's Archer-Daniels-Midland's recently announced strong earnings. 

 

Bunge's stock rose 5% to US$120.80 on the New York Stock Exchange, after hitting a new high last week, and was up about 30% this year.

 

Bunge's results revealed how global grains merchants have dealt with rising crop prices and supply chain interruptions caused by the Russia-Ukraine conflict. The two countries export about a third of the world's wheat, a fifth of the world's corn, and around 80% of sunflower oil. 

 

Greg Heckman, chief executive of Bunge, said world grain and vegetable oil supplies will take a long time to recover from disruptions caused by the war. Because of that, other producers and processors, notably in South America, will play a larger role in tamping down surging food prices.

 

Heckman said the disruptions include damaged infrastructure, seaborne logistics issues, and waters that must be de-mined.

 

The company's port facility in Mykolaiv suffered damage due to the conflict in March, but company executives said it was not significant.

 

Bunge, which generates money trading and processing crops and exporting products throughout the world, would benefit from the conflict.

 

Bunge increased its full-year adjusted earnings outlook to US$11.50 per share from US$9.50 before, citing "upside potential" due to constrained supply and high demand.

 

According to Refinitiv IBES, adjusted earnings, excluding one-time factors, increased to US$4.26 per share from US$3.13 a year ago, above the average forecast of US$2.94.

 

-      Reuters