October 26, 2012


Bunge reports over two-fold increase in Q3 net profit

Bunge's third quarter net profit more than doubled to US$297 million from US$140 million a year ago as historically tight crop inventories boosted sales.


Operating income in the three months to end-September jumped to US$441 million from US$191 million in third quarter last year, while volumes grew to 43.2 million tonnes from 38 million tonnes in the same period, the White Plains, New York -based company said in a statement.


Corn and soy prices have rallied to record highs during the summer as a severe drought roasted crops in the US, the world's largest grower of both products.


Companies such as Bunge, which profit from buying, selling, transporting and processing agricultural products, can benefit from volatile market conditions by using their vast infrastructure to deliver the right products when and where they are needed.


Bunge's grain merchandising business was boosted in third quarter by greater export demand and larger supplies from South America, where farmers have responded to rocketing prices by planting bigger crops.


"Stocks of corn and soy are tight, and the world is adjusting typical trade flows," CEO Alberto Weisser said.


"The world needs record crops to rebuild stocks, and today's high prices are sending a strong signal to farmers, especially in South America, to plant. Early indications are that soy production will be at record levels. As new crops are harvested, we should see a more balanced supply-demand situation, which will be good for consumers and for the market overall."


Corn and soy are key feed stocks for the production of ethanol and biodiesel, respectively.


In the Sugar and Bioenergy segment, Bunge said performance had improved, but overall results were impacted by a US$39 million impairment charge related to a US corn-ethanol joint-venture. The segment recorded an operating loss of US$46 million compared with a loss of US$43 million last year.


Despite improved performance, results in sugar milling and ethanol production were lower than expected because of port congestion in Brazil and the disappointing quality of sugarcane crops there, which led to reduced output and higher unit costs, Bunge said.

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