WHITE PLAINS, N.Y. — Strong performance in Grains helped overall results at Bunge Ltd. in the first quarter of fiscal 2016. Net income in the first quarter ended March 31 was $222 million, equal to $1.54 per share on the common stock, down 11% from $249 million, or $1.67 per share, in the same period a year ago. Earnings before interest and taxes were $322 million, down from $373 million.
Net sales fell 17% to $8,916 million from $10,806 million.
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| Soren Schroder, c.e.o. of Bunge |
“In the first quarter, our Agribusiness team managed markets, margins and logistics very well in a challenging environment,” said Soren Schroder, chief executive officer. “In Food & Ingredients, we are seeing positive signs in Brazil with gains in both volume and market shares. Overall, results were better than expected, our return on capital continues well above WACC (weighted average cost of capital), and we feel confident about growing earnings in 2016.”
Bunge said its Agribusiness results benefited from good performances in South America and effective risk management strategies. EBIT in the unit fell 15% to $282 million from $330 million. Sales fell 21% to $6,283 million from $7,911 million.
Oilseeds, which consists of Bunge’s oilseed processing activity, oilseeds trading and distribution business, and biodiesel joint ventures, posted EBIT of $138 million in the first quarter, down from $242 million in the same period a year ago.
“Lower oilseeds results were due to a softer global soy processing environment,” Bunge said. “Margins in the U.S. and Europe were negatively impacted by increased export competition from Argentina. Partially offsetting this decrease were improved results in Argentina, which benefited from increased farmer selling following the devaluation of the peso. Soy processing results in Brazil were good and comparable to last year. Oilseed trading and distribution results were similar to last year, benefiting from strong export flows out of South America.”
Grains, which consists of Bunge’s grain and origination business (primarily corn, wheat, barley, soybeans and soft seeds), global trading and distribution operations, ports, logistics and financial activities, had EBIT of $144 million, up sharply from $88 million in the prior year.
“In grains, higher results in the quarter were largely driven by improved performances in grain trading and distribution and our port services operation, which benefited from increased South American exports,” Bunge said. “Higher volumes were primarily driven by increased origination in South America, which more than offset declines in the U.S.”
EBIT in the company’s Edible Oil Products unit totaled $30 million, down from $36 million a year ago. Net sales eased to $1,526 million from $1,648 million.
Milling Products, meanwhile, posted EBIT of $22 million in the quarter, down from $36 million in the same period a year ago. Net sales fell 12% to $391 million from $535 million.
“Higher results in North America were primarily due to improved performance in our value-added categories and increased productivity in our U.S. operation,” Bunge said. “Our Mexican business delivered stronger volumes and productivity gains, but the impacts were offset by currency translation from the weaker peso.”
Bunge narrowed its loss in the Sugar and Bioenergy division, as the company’s loss before interest and taxes moved to $14 million from $23 million a year ago.
Bunge also said it has acquired Walter Rau Neusser, a European supplier of mid-specialty oils and fats for food service and food processing customers.
“This acquisition strengthens our value added and innovation capabilities in these channels and has important synergies with our existing agribusiness network,” Mr. Schroder said. “In our best-in-class strategy, performance improvement programs delivered approximately $24 million toward our full-year expectation of $125 million.”
