Bunge Q2 net income drops 50% on North America, Europe challenges

25 July 2013 13:08  [Source: ICIS news]

LONDON (ICIS)--Bunge’s second-quarter 2013 net income halved year on year to $136m (€103m) on the back of challenging conditions in North America, Europe and Argentina, the US-based agribusiness company said on Thursday.

Net sales for the quarter were up 7% to $15.5bn, but total segment earnings before interest and taxes fell to $239m compared to $404m during the second quarter of 2012, as a result of poor crop yields for some key products.

“We navigated the choppy markets well, but faced some challenges in North America, Europe and Argentina, which suffered from the continued effects of last year's poor oilseed and grain crops,” said Bunge CEO Soren Schroder.

“Our markets, while competitive, are growing steadily, and Bunge is well positioned for the future.  We recognise, however, that growth must be balanced with good returns, and Bunge's must improve, “ he added.

Net sales for the agribusiness division were up 9% year on year to $11.6bn, while sugar and bioenergy sales fell from $1.1bn to $939m over the same period.

Net sales of milling products in the quarter ending 30 June fell rose to $509m from $421m, while sales for the edible oil products business rose  to $2.4bn compared to $2.3bn during the same quarter in 2012.

Bunge has also launched a cost-cutting drive, stating that it will reduce capital expenditure in 2013 by $200m to $1bn, and commence a review of spending plans for 2014.

“Projects that more immediately improve efficiencies and competitiveness—and that generate faster payback—will be priorities for Bunge,” Schroder added.

Company CFO Drew Burke predicted that demand during the second half of the year is likely to be driven by slim customer inventories.

Burke said: “We are confident about the second half of the year.  In agribusiness, export demand for agricultural commodities should be strong due to the combination of lean customer inventory pipelines resulting from delays in exporting product out of South America, and lower prices driven by what are expected to be large new crops in the Northern Hemisphere. “

($1 = €0.76)

By: Tom Brown
+44 208 652 3214

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