29 July 2010 16:28 [Source: ICIS news]
HOUSTON (ICIS)--Coming off a weaker-than-expected performance in the second quarter of 2010, US agribusiness major Bunge said on Thursday it hoped for better results in the second half of the year on improving demand and processing margins.
"The second quarter was disappointing, due primarily to low volumes and margins in agribusiness,” said Bunge chairman and chief executive Alberto Weisser during a conference call with investors.
"We expect significant improvement in the second half of the year. In agribusiness, demand should be stronger and Northern Hemisphere harvests will contribute to new market conditions,” he added.
Weisser also said that sugar and ethanol production in Brazil would peak as the harvest progresses and sugar content yields improve.
Bunge on Thursday reported net income that surged to $1.8bn (€1.4bn) in the second quarter from $322m in the same period last year as a result of the sale of its fertilizer nutrients assets. However, it said that its operating performance was weaker than expected.
Net sales were flat year on year at $11bn.
Bunge said it had embarked on a restructuring and consolidation plan in an effort to reduce costs in the face of Brazil's continued currency strength and rising labour costs. It anticipated annual cost savings from the actions of approximately $120m beginning in 2011.
The outlook for US crops was positive, and margins for oil crushing and other processes should rise as the harvest commences, Bunge said.
The company predicted that strong demand for soybean meal and vegetable oil in the second half of this year would continue into 2011.
Weisser noted that there was more global demand than supply for vegetable oil.
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