25 October 2012 17:16 [Source: ICIS news]
HOUSTON (ICIS)--Decreasing prices for ethanol in Brazil are putting pressure on margins, but improved efficiencies will allow for continued growth, US-based agribusiness Bunge said on Thursday.
Bunge expects that its sugar and ethanol milling businesses will improve through the remainder of the year, said CFO Drew Burke in a conference call with investors.
"We remain on track to reach our planting target of approximately 70,000 hectares [173,000 acres] of sugarcane this year," Burke said.
"This, combined with the steps we are taking to improve the efficiency of our operations, should enable us to operate our mills at full capacity in the 2013 crop year with lower unit production costs," he said.
Earlier Thursday, Bunge reported that third-quarter net income more than doubled to $297m (€229m) from $140m in the same period last year as sales rose, driven by its agribusiness segment.
Sales for the three months ended 30 September increased by 11% year on year to $17.3bn, while segment earnings before interest and tax (EBIT) rose steeply to $441m, from $191m reported in the third quarter of 2011.
"The volume of business in the fourth quarter will shift to the northern hemisphere as our operations focus on North American crops," said Bunge CEO Alberto Weisser.
"The agribusiness environment feels good, and strong demand for commodity products will continue globally, particularly from Asia," said Weisser.
Bunge's fertilizer operations in South America in the fourth quarter were complicated by a two-month-long strike at Brazilian ports that prevented vessels from unloading.
Weisser said Bunge expects that first-half 2012 fertilizer losses will be somewhat recovered in the second half of the year.
"With soybean supplies in South America at low levels, oilseed processing will largely be driven by North America and Europe, which should benefit from strong export demand," Burke said.
"Considering the tight supply environment, global grain demand will continue to be met by a variety of products from different geographies. With our global network of ports and elevators, our grain merchandising operations should continue to perform well," said Burke.
($1 = €0.77)
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